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While last week was lighter on economic data, global headlines were anything but quiet. Trade talks between the U.S. and China took center stage, and rising tensions between Israel and Iran rattled investor confidence. Still, beneath the surface, key inflation data and shifting expectations quietly shaped the market narrative.

The week began with the ISM Manufacturing Purchasing Managers’ Index (PMI) report on Monday, which showed continued weakness in the manufacturing sector. The index came in at 48.5 for May, slightly below April’s 48.7, marking the third consecutive month of contraction. Trade-related concerns and rising tariffs were cited as key challenges, with export and import activity weakening significantly.

Last week’s economic data offered a mixed view of the U.S. economy, beginning with a notable rebound in consumer sentiment. On Tuesday, consumer confidence rose sharply in May to 98 from 85.7 in April, reversing five months of declines. The improvement was driven by a significant increase in expectations for future income and business conditions. Current assessments of the economy also improved, though concerns about job availability remained.