Equity Markets
Equities Rally Across the Board, Nasdaq Composite Up Almost 10% in May.
Stocks posted strong performances across the board including the S&P 500 and Nasdaq, which both had their best months since November 2023. The Nasdaq Composite surged 9.7%, the S&P 500 increased 6.3%, and the Dow Jones Industrial Average added 4.2%. Several companies in the semiconductor sector, including Microchip Technology (MCHP), Broadcom (AVGO) and First Solar (FSLR) helped propel indices higher with jumps of 25% or more in May.
Global markets also had a solid month; Developed EAFE Markets posted a 4.7% gain and Emerging Markets added 4.3%.
The only negative sector in May was the Health Care sector, which slipped 5.6%. The three best sectors in May were Technology (+10%), then Industrials (+8.8%), which was helped by respective 27% gains in GE Vernova (GEV) and Rockwell Automation (ROK), followed by Consumer Discretionary (+8.4%).
Economic Data Overview
Gold Breaks Four-Month Win Streak, Fed Funds Rate Stays Unchanged, Crypto Soars.
Employment
The unemployment rate was unchanged in April at 4.2%, and the labor force participation rate inched higher for the second-straight month, up to 62.6%. Nonfarm payroll data showed that the U.S. economy added 177,000 jobs in April, lower than the downwardly revised 185,000 in March but higher than the Dow Jones estimate of 133,000.
Consumers and Inflation
The US inflation rate fell to 2.31% in April, while core inflation came in virtually unchanged Month over month at 2.78%. The US Consumer Price Index Month over month rose by 0.2% after contracting in March for the first time since May 2020, and US Personal Spending increased 0.23%.
The Federal Reserve maintained its key Fed Funds Rate target range of 4.25%-4.50% at the FOMC’s May 7th meeting, the third consecutive meeting in which it has voted to do so. The next meeting will take place on June 18th, where investors again anticipate the target range to remain unchanged, according to the CME FedWatch tool.
Production and Sales
The US ISM Manufacturing PMI fell by 0.2 points in April to 48.5, keeping the index in contraction territory for the third consecutive month. However, the Services PMI rebounded 0.8 points between March and April, bringing its latest reading up to 51.60. The YoY US Producer Price Index declined drastically from 3.37% in March to 2.38% in April, while US Retail and Food Services Sales rose slightly Month over month between March and April.
Housing
US New Single-Family Home Sales surged 10.9% higher Month over month in April, though Existing Home Sales contracted slightly by 0.5% Month over month. The Median Sales Price of Existing Homes grew 2.7% in April to $414,000, retaking the same level as August 2024, but remains 3% off its all-time high. Mortgage rates continued to stay relatively stable in May as they have throughout 2025; the 15-year Mortgage Rate was 6.03% as of May 29th, while the 30-year came in at 6.89%.
Commodities
The price of gold was relatively flat in May, breaking a four-month win streak and causing the SPDR Gold Shares ETF (GLD) to finish the month at $303.60 per share, just 1.37% below its all-time high. Oil prices rebounded following a sharp decline in April; the price of Brent crude rose 1.5% Month over month to $64.32 per barrel as of May 27th, while the price of WTI increased 3.5% to $61.61 per barrel as of the same date. As a result, the average price of gas rose three cents Month over month to $3.29 per gallon.
Cryptocurrencies
Major cryptocurrencies posted strong rallies in May. Bitcoin surged 10.4% in May to end the month at $104,010.90, setting a new all-time high and bringing the asset class up 12.3% YTD. Ethereum jumped 40.5% in May to $2,524.48 as of May 31st, though the second-largest cryptocurrency by market cap remains down 24.9% YTD and 45.3% below its all-time high.
Fixed Income Performance: Insights into Bond ETFs and Treasury Yields
The yield curve steepened in May as rates on all Treasury instruments between 1 and 30 years increased anywhere between 24 and 29 basis points. The 3-month treasury rate increased 5 basis points, and the 1-month fell by 2. Steepening yields caused long-duration bond funds to fall, including the iShares 20+ Year Treasury Bond ETF (TLT) which declined 3.2%.
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