S&P 500 Turns Green in 2025: ETFs to Buy on Upbeat Prospects

U.S. stocks rose on May 13, 2025, buoyed by strong gains in the tech sector after new inflation data hinted at easing price pressures in April. Optimism surrounding a temporary U.S.-China trade truce also contributed to the market's upward momentum.

S&P 500 Erases Yearly Losses in Record Time

A combination of encouraging news drove the S&P 500 to erase its 2025 losses. The index is now up by 0.3% in the year-to-date frame. This marks a dramatic reversal from just over a month ago, when the index had fallen to the 2025 lows. The current rally represents the fastest recovery from a 15% year-to-date drop since 1982, according to Bespoke Invest, as quoted on Yahoo Finance.

Against this mixed backdrop, investors may track S&P 500 ETFs like Vanguard S&P 500 ETF VOO, iShares Core S&P 500 ETF IVV, SPDR S&P 500 ETF Trust SPY and Invesco S&P 500 Momentum ETF SPMO. 

NVIDIA Surges Past $3 Trillion, Megacaps Climb

Tech giants led Tuesday’s rally, with NVIDIA NVDA gaining nearly 6% to once again cross the $3 trillion market capitalization threshold. The company benefited from renewed optimism in the AI and semiconductor space, fueled by positive trade developments. Other members of the “Magnificent 7” also posted gains.

Coinbase Joins S&P 500 in Milestone for Crypto Industry

Coinbase COIN soared about 24% after being added to the S&P 500, becoming the first cryptocurrency exchange to join the benchmark index. The move is being tagged as a landmark moment for the crypto sector.

Inflation Cools, But Fed Holds Steady

April’s Consumer Price Index (CPI) report revealed the lowest annual inflation rate since 2021, signaling no immediate price pressures despite earlier tariff volatility. However, economists noted the data is unlikely to change the Federal Reserve’s cautious approach. Bond markets are now pricing in a potential 0.25% rate cut in September, a shift from the earlier expectations for a June move.

Trump Urges Fed to Cut Rates

President Trump took to Truth Social to pressure the Federal Reserve for rate cuts, citing cooling inflation and lower consumer prices.

Wall Street Ups Forecasts as Trade Tensions Ease

Investment banks are turning more optimistic on U.S. stocks following the 90-day U.S.-China tariff truce. Goldman Sachs raised its year-end S&P 500 target to 6,100 from 5,900, while Yardeni Research lifted its forecast to 6,500, up from a previous call for 6,000, as quoted on Yahoo Finance. Morgan Stanley shares the same view as that of Yardeni.

The most bullish forecast comes from Wells Fargo, which predicts that the S&P 500 will close out 2025 at 7,007. Fundstrat predicts it at 6,600. Analysts cited stronger economic growth, fewer recession risks, and reduced tariff pressure as the key factors behind the upgrade.

S&P 500 ETFs in Focus

Apart from SPY, VOO and IVV, investors can play the growth part of the index with SPDR Portfolio S&P 500 Growth ETF SPYG and the value part of the index with SPDR Portfolio S&P 500 Value ETF SPYV.

SPDR Portfolio S&P 500 High Dividend ETF Fund SPYD is a good bet for the dividend plays of the index. Investors can also bet on the leveraged S&P 500 ETFs like Direxion Daily S&P 500 Bull 3X Shares SPXL and ProShares Ultra S&P500 SSO, if the index manages to record some gains in 2025. However, if the S&P 500 falls by any chance, inverse ETF ProShares Short S&P500 ETF SH will rise.

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This article originally published on Zacks Investment Research (zacks.com).

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