Market Insights

Industrials are breaking out as recession worries fade.

The economically sensitive group, home to companies like General Electric (GE) and Caterpillar (CAT), ended last week above its previous peak in February. It’s the first major sector to break out following the tariff selloff in March and early April. Industrials are also the top performers this year with a gain of 9.7 percent, according to TradeStation data.

The broader S&P 500 rose 1.5 percent last week. It closed above 6,000 for the first time since mid-February and is barely 2 percent below its previous all-time high.

No single catalyst clearly explained the advance. Instead, there was a lack of bad news and signs of progress on key trade issues. The two biggest headlines came on Friday, when job growth surprised to the upside and the White House announced more talks with China.

The employment report showed nonfarm payrolls increased by 139,000 in May, about 9,000 more than expected. Unemployment matched estimates. That calmed worries about a slowing labor market — especially after jobless claims rose more than expected.

S&P Industrial Select Sector index ($SIXI.X), daily chart, showing breakout to new high.

Relations with China evolved from tense to hopeful over the course of the week. President Trump initially accused Beijing of breaking agreements and complaining that it was “extremely hard” to make a deal with President Xi. But they held a phone call on Thursday and later announced a meeting would occur in London today. Separately, Reuters reported that the Asian giant eased export restrictions on rare-earth minerals for big U.S. automakers.

‘Risk-On’ Rally?

Last week’s gains were spread across several areas, but risk taking was the main theme.

Economically sensitive metals like silver and platinum surged. Silver closed at a 13-year high and platinum hit levels last seen in mid-2021.

Biotechnology stocks jumped after Sanofi (SNY) acquired Blueprint Medicines (BPMC) for a 27 percent premium. The deal, intended to bolster SNY’s drug pipeline, drew attention to an industry that’s lagged for years. Chinese companies and small caps also climbed.

Those groups have little in common aside from representing a “risk-on” sentiment. “Safe havens” like consumer staples and utilities, on the other hand, declined.

Technology was the top-performing sector overall last week, partially helped by Microsoft’s (MSFT) push to a new record high. On Semiconductor (ON), which lost about two-thirds of its value between August 2023 and April 2025, predicted a rebound in demand. Micron Technology (MU) started shipping a new super-thin memory chip for AI on smartphones. UBS also hiked its price target from $92 to $120.

Dollar General (DG) reported better-than-expected earnings, revenue and guidance. That spurred hope of a turnaround in the discount retailer, triggering its biggest weekly gain in three years.

Energy stocks, which are also sensitive to economic conditions, were the No. 2 sector last week.

Tesla’s Wild Ride

There was also a dramatic conflict between the world’s richest man — Tesla (TSLA) CEO Elon Musk — and the world’s most powerful man: President Trump.

It started on Tuesday when Musk called Republicans’ spending plan a “disgusting abomination.” That directly opposed a piece of legislation described by Trump as a “big, beautiful bill.” Two days later, Trump said Musk was unhappy about the elimination of EV subsidies.

The tech executive then made attacks on the president’s election and personal life. Trump responded by threatening to cut contracts. Musk hit back with implied support for impeachment and called for the creation of a third party.

TSLA swung wildly as the social posts flew. It fell as much as 21 percent before rebounding, but still had its worst week since October 2023.

Lululemon Athletica (LULU) and Brown-Forman (BF.B) also dropped sharply on weak results. While their businesses are different (yoga wear and liquor) tariffs and trade wars impacted both. LULU also faced weaker demand and comparable sales.

Kenvue (KVUE), owner of brands like Tylenol and Benadryl, slid after warning the late spring would hurt business.

Charting the Market

Last week saw the S&P 500 potentially escape a range that began on May 12. Some chart watchers may see little clear resistance below the previous all-time high from February 19, especially if prices stay above 6,000.

Second, the nine-day rate of change (ROC) has resumed rising after a period near zero. The 8-day exponential moving average (EMA) has also stayed above the 21-day EMA. Those patterns may suggest short-term momentum remains positive.

Next, Cboe’s volatility index (VIX) ended last week at its lowest level since the selloff began in late February. That’s potentially consistent with risk appetite.

Wall Street strategists expressed positive views, as well. Deutsche Bank raised its year-end price target on the S&P 500 from 6,150 to 6,550, citing profit growth and less tariff risk. Barclays went from 5,900 to 6,050. RBC made a similar move but remains bearish overall, forecasting lower prices overall.

Another important sentiment gauge was more negative: Less than one-third of investors polled by the American Association of Individual Investors were bullish last week — the lowest level since the beginning of May. That may suggest many potential buyers are still holding cash and keeping pullbacks shallow.

S&P 500, daily chart, with select patterns and indicators.

The Week Ahead

This week features some technology events and an important inflation report on Wednesday.

Early today could bring important news about the meeting with China, led by U.S. Treasury Secretary Scott Bessent. Apple’s (AAPL) Worldwide Developers Conference (WWDC) also begins with a presentation by CEO Tim Cook at 1 p.m. ET. Wall Street will watch for signs of AAPL catching up in the field of AI.

Nothing important is on Tuesday.

Wednesday brings the key consumer price index (CPI) at 8:30 a.m. ET. Crude-oil inventories are later in the morning and Oracle (ORCL) reports earnings in the afternoon.

Producer prices are on Thursday morning, along with initial jobless claims. Adobe (ADBE) announces results in the postmarket and TSLA is expected to launch its Robotaxi service in Austin.

The University of Michigan’s initial reading of consumer sentiment is on Friday morning.