Investors may be suffering tariff whiplash but markets are set for solid May gains

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U.S. President Donald Trump says he’ll hit EU goods with a 50% tariff. A few days later he reverses course. Then a federal court strikes down many of his import taxes, ruling that he didn’t have the power to levy them. And then, just hours later, another court puts that ruling on hold, letting the tariffs continue—for now.

It’s no wonder, then, that whiplashed investors have few ideas about what to expect next. Wall Street is also in the fog. As Deutsche Bank’s global head of macro research, Jim Reid, wrote this morning, “It really is hard to keep up. Trading and analysing this market successfully requires a lot of luck. Unless of course I get it right and then it’s skill.”

Investors showed their indecision in premarket trading Friday, as they awaited the release of the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index.

S&P, Nasdaq and Dow futures were all flat. In Asia, stocks broadly fell, with Japan’s Nikkei and Hong Kong’s Hang Seng both dropping 1.2%, while India’s Nifty 50 lost 0.3%. Europe, on the other hand, rose in midday trading. Germany’s Dax was up 0.9% while London’s FTSE rose 0.7%.

Taking a step back, though, May will be a banner month for stocks.

At the close of Thursday trading, the S&P 500 was up 6.2% for the month, while the Nasdaq has jumped 10% in the same period, and the Dow has risen about 4%. These rises leave all three close to even for the year, leaving investors back at the start line.

But while markets boomed in May, and are back at the waterline for the year, Wall Street analysts are asking if the sound and fury of the first five months of 2025 has made markets more uncertain than ever.

“There is yet more uncertainty in the U.S. economy,” UBS chief economist Paul Donovan wrote this morning. “U.S. President Trump appealed the ruling that their trade taxes were illegal. While this is decided, the taxes stay.

“There are thus three layers of uncertainty. Will the taxes survive? If they are illegal, will U.S. companies and consumers get refunds? And are trade taxes today actually being collected? There is also uncertainty around how U.S. companies will react to this uncertainty, especially with pricing.”

Here’s a snapshot of today’s action prior to the opening bell in New York:

The S&P 500 rose 0.4% Thursday. The index is up 0.5% YTD.
S&P futures were trading down 0.1% this morning.
The Stoxx Europe 600 was up 0.6% in early trading.
Asia was down: Japan was off 1.2%. Hong Kong also fell 1.2%. Shanghai was down 0.5%, and India’s Nifty 50 was off 0.3%.
Gap shares tumbled more than 15% in pre-market trading after the retailer gave a softer-than-expected second-quarter outlook.
Bitcoin was sitting up at $105,800 this morning.