Investing.com -- U.S. stocks extended their rally on Friday, with the S&P 500 notching its fifth straight gain and all three major indexes posting solid weekly advances, despite weaker consumer sentiment data and ongoing inflation concerns.

The S&P 500 rose 0.70% to close at 5,958.38, while the Nasdaq Composite added 0.52% to finish at 19,211.10. The Dow Jones Industrial Average climbed 331.99 points, or 0.78%, to 42,654.74—pushing the index into positive territory for the year.

For the week, the S&P 500 gained 5.3%, the Dow advanced 3.4%, and the Nasdaq surged 7.2%, driven by a strong rebound in tech. Nvidia (NASDAQ: NVDA ) soared 16%, Meta (NASDAQ: META ) rose 8%, and Apple (NASDAQ: AAPL ) and Microsoft (NASDAQ: MSFT ) gained 6% and 3%, respectively.

Markets were buoyed by easing trade tensions after the U.S. and China agreed to a 90-day pause on new tariffs, offering investors some relief from fears of further escalation. Investors are hoping for more clarity on trade policy in the weeks ahead.

This week, market attention turns to the economic fallout from recent U.S. tariffs, with a particular focus on how the uncertainty is affecting global activity.

Investors will be closely watching May’s U.S. purchasing managers’ surveys on Thursday for a timely read on manufacturing and services performance.

While most official U.S. data has so far pointed to a resilient economy, analysts caution that these figures are backward-looking and don’t yet reflect the full impact of U.S. President Donald Trump’s sweeping tariff announcement on April 2. Despite some rollbacks, tariffs of 10% or more remain elevated by recent standards.

“Global activity is still showing resilience including in the U.S. where continued frontloading is supporting the ‘hard data,’” analysts at Citi noted. However, they warned that “‘soft data’, such as activity and confidence surveys, paint a potentially grimmer picture, particularly in the U.S. where consumer and business confidence are still deteriorating.”

Alongside the PMI data, the week will bring housing reports, including April’s existing home sales on Thursday and new home sales on Friday. Weekly jobless claims are also set for release Thursday.

Investors brace for retail earnings prints

Meanwhile, a wave of U.S. retail earnings this week will help gauge the economic impact of evolving tariff policies and challenge the recent surge in equity markets.

Reports from major names like Target Corporation (NYSE: TGT ), Home Depot (NYSE: HD ), and Lowe’s (NYSE: LOW ) will arrive at a time when fears that President Donald Trump’s tariffs could trigger a recession have started to ease among investors.

However, Walmart (NYSE: WMT ) warned on Thursday that it will need to raise prices in response to high tariffs has shifted focus onto other retailers. Investors are now closely watching how companies across the sector are navigating a trade environment that remains highly uncertain.

These results are also expected to provide a fresh read on consumer spending trends, a key driver of the U.S. economy, which relies heavily on household consumption.

Other companies set to report this week include Snowflake (NYSE: SNOW ), Baidu (NASDAQ: BIDU ), and Palo Alto Networks (NASDAQ: PANW ).

What analysts are saying about U.S. stocks

JPMorgan : “De-escalation in trade uncertainty, with U.S. dropping proposed tariffs on China from 145% down to 41%. While this is unlikely to be the end of trade noise, we think that the worst of it is likely behind us.”

RBC Capital Markets : “The gap up in the S&P 500 at the beginning of last week made sense in the context of the latest U.S.-China trade developments, which we see as reducing – but not eliminating – the headwinds to GDP growth and the tailwinds for inflation that have emerged since the start of the year. But this modeling also tells us that upside from here through year-end seems limited without another step-up improvement in expectations for the macro backdrop in the balance of the year and that the stock market may be a little ahead of itself from a fundamental perspective.”

Morgan Stanley : “The equity return/bond yield correlation is right around 0, having declined from the early April highs of 0.6. In other words, rate sensitivity is on the verge of increasing for stocks. On the monetary policy front, our economists don’t see the Fed cutting rates this year. Thus, the burden is on rebounding EPS revisions to push the rally beyond 6100 short-term as rate relief appears less likely at both the front- end and back-end of the curve.”

Capital Economics : “While we suspect the dust will continue to settle, there are some signs of residual stress in markets that aren’t directly related to Trump’s tariff and trade policies, and which may linger. Regardless, trade negotiations themselves may suffer setbacks before “pauses” on tariffs expire. Accordingly, we wouldn’t be surprised to see some renewed volatility, albeit less pronounced than it was last month.”