U.S. Market Wrap-Up: May 13, 2025

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U.S. stock markets presented a mixed picture on Tuesday. A strong rally in technology stocks, fueled by optimism surrounding President Trump’s visit to Saudi Arabia and significant investment agreements, propelled the Nasdaq and S&P 500 higher. However, the Dow Jones Industrial Average declined, heavily impacted by an unprecedented plunge in United Health Goup’s shares.

Key Index Performance:

Nasdaq Composite: Surged +1.61% to close around 19,010.09. The RSI (Relative Strength Index) moved above 70, indicating overbought conditions.
S&P 500: Gained +0.72% to finish around 5,886.55. It touched the 5,900 level intraday, raising expectations for the 6,000 mark, and turned positive year-to-date.
Dow Jones Industrial Average: Fell -0.64% to 42,140.43, primarily due to the steep sell-off in UnitedHealth.
Rusell 2000: Increased by +0.79% to 2,108.70 (based on the more detailed first report).
CBOE Volatility Index (VIX): Dropped by approximatetly 2.34% to 17.96, signaling reduced market anxiety.
U.S. Dollar Index (DXY): Declined by about 0.80%-0.81% to around 100.79-100.97.
10-Year Treasury Yield: Rose by 2 basis points to approximately 4.47%-4.48%.
Gold: Climbed by 0.78%-0.80% to $3,253.20 per troy ounce.
WTI Crude Oil: Surged by 2.89%-2.91% to $63.74~$63.75 per barrel.
Cryptocurrencies: Bitcoin rose +2.67% (around $104,000), and Ethereum jumped +8% (around $2,600). Solana’s market cap reportedly surpassed that of Binance Coin.

Key Market Drivers:

U.S.-Saudi Arabia Economic Cooperation:
– President Trump’s visit to Saudi Arabia and meetings with Crown Prince MBS (Mohammed bin Salman).
– Announcement of a $1 trillion investment framework (with more concrete figures around $300~600 billion including $80 billion for AI data centers).
– Involvement of major U.S. companies (e.g., Google, Oracle, Salesforce, AMD, GE Vernova, Boeing) in singnificant deals.
: To collaborate on AI data centers for Saudi AI firm ‘Humain’ (Nvidia to supply 18,000 Blackewell Units, AMD involved in a $10 billion project).
– The U.S. announced an easing or repeal of Biden-era export regulations on AI semiconductors to third countries.
– President Trump also announced the lifiting of U.S. sanctions on Syria.
Consumer Price Index (CPI) Data:
– Headline CPI: +2.3% year-over-year (YoY), +0.2% month-over-month (MoM).
– Core CPI: +2.8% YoY, +0.2% MoM.
– The figures were generally in line with or slightly below expectations. However, ongoing inflation uncertainty, particularly due to rising housing costs, persisted.
– President Trump criticized the Federal Reserve for being too slow to cut interest rates.
Institutional Outlook on Recession:
– Major institutions like JP Morgan and Goldman Sachs lowered their probability forecasts for a recession (Goldman Sachs to 35%).

Major Sector and Stock Movements:

Technology/Growth Stocks Led Gains:
– Semiconductors: Nvidia (+5.6%-5.7%, above $130, RSI overbought), AMD (+4%), Broadcom (+4.89%), Oracle (+3%), Dell (+4%) all rallied strongly.
– Tesla: Climbed approximately +4.8% (to around $333, RSI overbought), buoyed by Saudi Arabia’s approval for Starlink services, demonstrations of the Optimus robot, and positive remarks from Elon Musk on the humanoid robot business.
– Uber: Rose +4% to an all-time high, following CEO’s comments on autonomous vehicle plans in Saudi Arabia.
– Coinbase: Skyrocketed +24% on S&P 500 inclusion prospects, four consecutive profitable quarters, and institutional inflows.
– Arm Holdings: Jumped +11.8% following strong earnings and upgraded guidance.
– Netflix: Gained +2.56% on optimism about its ad-supported tier.
– Amazon (+1.31%), Google, and Meta also saw modest gains. Palantir shares were strong.
– Microsoft: Remained flat (-0.03%); announced plans for several thousand layoffs to reduce costs.
Healthcare/Insurance Stocks Plunged (Defensive Stocks Weakened):
– UnitedHealth Group (UNH): Plummeted -17.79% to -18% (to around $311). CEO Andrew Witty voluntarily resigned, and the company withdrew its 2025 annual guidance due to a combination of factors including soaring Medicare Advantage costs, government drug price reduction policies, and the fallout from a recent cyberattack.
– This had a contagious effect on other sector players: Johnson & Johnson (approx. -3%), Merck (approx. -4%), CVS Health (approx. -6%), Humana (approx. -9%), Bristol Myers Squibb, Pfizer, and Eli Lilly also declined.

Other Notable Movers:
– Walmart: Down -0.9% ahead of earnings, amid tariff uncertainty.
– McDonald’s: Fell -1% following a large hiring announcement.

Market Outlook and Analyst Opinions:

Federal Reserve Rate Cut Expectations: A July rate cut is viewed as unlikely (34.2% probability). A first cut in September (51.3% probability) or a total of two cuts by December (37.8% probability) are seen as more probable. Wall Street generally expects teh Fed to awaits more data.
Analyst Target Price Increases:
– Goldman Sachs (David Kostin and overall): Raised S&P 500 year-end target to $6,000-$6,100.
– Ed Yardeni: Lifted S&P 500 target to $6,500 and lowered recession probability to 25%.
UBS Asset Management: Maintained a ‘neutral’ stance on U.S. equities, expressing some caution.
Market Fear & Greed Index: Reached 69, its highest for the year, entering the ‘Greed’ zone.

Upcoming Key Events:

Speech by Federal Reserve Governor Christopher Walker.
Earnings reports from Cisco and CoreWeave.

In Summary: Diplomatic successes by President Trump in the Middle East and expectations of large-scale investments strongly propelled the market. However, UnitedHealth’s unique situation significantly weighed on the Dow. Inflation data provided mixed signals, leaving uncertainty regarding the Fed’s future policy. While the tech-led rally continued, some indicators suggested overbought conditions, warranting a degree of caution.