Stocks in the U.S. fell on May 20, 2025, ending the previous six days of gains for the S&P 500, as key technology firms slipped and yields on Treasuries rose for the second time in a row. The Dow Jones Industrial Average lost 114.83 points, or 0.3%, while the technology-heavy Nasdaq Composite closed 0.4% lower, thanks to difficulties in the tech sector, which had contributed to the recent rally. The slowing of the market shows that investors are more cautious because of worries about the national budget, future tariffs and what central banks might do.

Rally From Big Tech is losing steam

Technology stocks ended their previous run of strong growth, pulling back significantly. Alphabet, Amazon, Apple and Nvidia all fell by more than 0.9% in their share prices. Among the seven well-known tech giants, Tesla was the only one to move up by 0.5% after CEO Elon Musk said he would remain in charge for five more years and plans to cut back on political spending. People interested in investing in Nvidia are closely watching its earnings report on May 28. The drop in tech stocks followed a long period when they powered the S&P 500, proving that they have a big say over how markets move. A decrease in value occurs when investors review the long-term future of tech company profits in a cloudy economic climate.

Yields on Treasuries Have Moved Up Due to Increased Fiscal Fears

There have been sharp increases in yield on U.S. government debt in the bond market. For the second day in a row, the 10-year yield rose to 4.481%, and the 30-year yield climbed to 4.967%. Fears linked to the tax-and-spending bill, along with Moody’s recent lowering of the U.S. credit rating, are making investors cautious. Schleif pointed out that how Congress handles money matters this week will closely affect the bond market. Higher yields from the bond market have negatively affected government bonds and influenced markets to act more conservatively with stocks.

Tariff-related worries caused retail stocks to show mixed results. Tariff-related plans to maintain prices led Home Depot shares to fall 0.6% after its profit for the quarter was lower than expected. But just recently, when Walmart cautioned that new tariffs would lead to higher prices for consumers, President Trump criticized the move. This difference in the financial results between these businesses points to the risk of tariffs on the economy. Some firms try to continue selling low by bearing the extra expenses, while others are raising prices, which is adding to the rise in inflation.

Bank Governors Respond to Weak Trade and Economic Concerns

Economic pressures resulting from trade issues and reduced growth prompted policymakers around the world to action. Australia’s main bank lowered interest rates to a level not seen in two years, indicating that it wishes to support the economy. In response, banks in China decreased their lending rates to match the relief actions taken by the People’s Bank of China. Many Asian and European markets appreciated the recent moves, as the Hang Seng index in Hong Kong gained 1.5%. Still, after a Japanese bond auction was poorly received, yields on government bonds increased as investors worried about their finances.

People are watching what Federal Reserve officials say closely to learn about changes in the monetary policy. St. Alberto Musalem, head of the Louis Fed, tariffs could still cause a “significant” impact despite the latest US-China trade reprieve. It looks as if markets are expecting at least two 25-basis-point rate cuts by the end of 2025, with the first expected in September. Such a viewpoint shows that people are not sure exactly when and by how much the Federal Reserve might address inflation and trade-related pressures. What fiscal stimulus, trade policy and monetary accommodation interact continues to shape the movement of markets.

Understanding Market Breadth and Level of Trading

Stocks declined more than they advanced on the New York Stock Exchange, with declining issues outnumbering advancing ones by a ratio of 1.37 to 1. The S&P 500 showed 19 new highs for the year and zero lows, and the Nasdaq registered 59 new highs and 46 new lows. Traders exchanged around 16.14 billion shares on U.S. exchanges, below the ten-day moving average of 17.38 billion. The figures show that some investors are making strategic purchases, but most are keeping a low profile after recent gains.

What Predictions Can Be Made for the Markets?

The recent decline in the market suggests that ongoing uncertainties about taxes and trade issues could easily damage the rally. The passage of the large tax-and-spending bill by Congress could change the country’s debt outlook and affect interest rates, while rules on tariffs are still uncertain. People watching the market will be keen to see if companies like Nvidia report solid growth in their earnings. Statements by the Fed and actions taken by Congress will greatly affect the way markets see the future. Markets will probably continue to rise or stay shaky for a while, depending on how fiscal policy, trade agreements and central banks move forward.