Monthly Market Insights | May 2025
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U.S. Markets |
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Stocks were mixed as buyers emerged late in the month, thanks to solid corporate reports and unexpected trade news. The Standard & Poor’s 500 Index declined 0.76 percent while the tech-heavy Nasdaq Composite rose 1.26 percent. The Dow Jones Industrial Average lagged, however, falling 3.17 percent.1
Spotlight on TradeStocks began the month with a modest rally as markets tried to anticipate the potential impact of previously announced tariffs. However, soon after the closing bell rang on April 2, investors were caught off guard by a tariff update from the White House. Global markets reacted to the news overnight.2 Largest Gain in 17 YearsAfter the White House announced on April 9 a 90-day pause on specific tariffs, markets pushed higher. The S&P 500 gained 9.5 percent, its largest one-day increase in 17 years. Stocks slipped the next morning, however, despite an upbeat Consumer Price Index report showing that core inflation rose at a mere 2.8 percent annual rate, the best number in more than four years.3,4 Stocks regained some momentum after several money center banks reported Q1 numbers above expectations. But investors were unsettled again following Federal Chair Powell's concerns that tariffs would likely “move us further away from our goals,” which includes keeping inflation in check.5,6 Late-Month RallyStocks rallied late in the month on news that the administration intended to de-escalate tariff tensions with China. Markets also liked hearing Treasury Secretary Scott Bessent state that the U.S. was close to a trade deal with India. Megacap tech stocks led the market’s advance, with several checking in with upbeat Q1 corporate reports.7 Sector ScorecardSeven sectors of the S&P 500 Index ended the month in the red while the other four sectors posted gains.8 Energy (-13.86 percent) was under pressure throughout the month. Healthcare (-3.79 percent), Materials (-2.43 percent), and Financials (-2.11 percent) were also under pressure, while Communication Services (-1.05 percent), Real Estate (-1.31 percent), and Consumer Discretionary (-0.10 percent) were down only slightly.8 Technology (+1.69 percent) led the gainers. Consumer Staples (+0.20 percent), Utilities (+0.06 percent), and Industrials (+0.11 percent) rounded out the winning sectors.8
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What Investors May Be Talking About in May |
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In the month ahead, three events may influence the financial markets: the Fed’s next meeting, quarterly corporate reports, and inflation data. The Fed’s meeting ends on May 7, and the markets will be looking for any update on short-term rates. Fed Chair Powell has indicated the central bank could find itself in a dilemma between managing inflation and supporting economic growth. The peak period for first-quarter corporate reports ends mid-May, and investors are anticipating more CEOs will provide outlooks for 2025 and into 2026.9 Finally, the markets will get an update on consumer inflation on May 13, which reflects data from April. Investors will be looking to see if tariffs had any impact on the April numbers. |
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World Markets |
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The MSCI-EAFE Index rose 4.17 percent in April, outperforming all three major US market averages for the fourth consecutive month.10 European markets were mixed. Germany picked up 1.5 percent and Spain added 1.16 percent. But the U.K., France, and Italy finished lower.11 Pacific Rim markets were also mixed, with Australia (+3.61 percent) and Korea (+3.04 percent) among the best performers. China’s Hang Seng index fell 4.33 percent.12
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Indicators |
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Gross Domestic Product (GDP)The economy contracted at an annualized 0.3 percent rate in Q1 2025, falling short of economists’ expectations. It marked the first decline in GDP since 2022.13 EmploymentEmployers added 228,000 jobs in March, higher than the 140,000 jobs economists were expecting. Unemployment edged up to 4.2 percent. Annualized wage growth rose 3.8 percent in March, cooler than February’s 4 percent rise.14 Retail SalesConsumer spending rose 1.4 percent in March, slightly better than expectations of a 1.3 percent rise. It was the largest monthly increase in retail sales in over 2 years, driven in part by pre-tariff buying of autos and auto parts. Excluding the auto categories, sales were only up 0.5 percent.15 Industrial ProductionIndustrial output increased 1.3 percent in March, following a 1.5 percent gain in February.16 HousingHousing starts fell 11.4 percent in March over the prior month, an about-face from February’s revised increase of 9.8 percent. It marked the largest drop in a year as high home prices and mortgage rates combined with tepid demand. Single-family starts fell 14.2 percent. Starts fell the most in the West region (-30.9 percent), and rose the most in the Midwest (+76.2 percent).17 Sales of existing homes unexpectedly fell 5.9 percent in March as economic uncertainty unsettled buyers. The median existing home sales price was $403,700, an all-time high for any March.18 New home sales rose 7.4 percent in March. The median new home sales price fell 1.9 percent from the prior month to $403,600 in March. There were 503,000 unsold new homes on the market in March, equal to 8.3 months of supply at the current pace of sales.19 Consumer Price Index (CPI)Consumer prices unexpectedly fell 0.1 percent in March—the first month-over-month decline in almost five years. Year over year, prices rose 2.4 percent, less than the 2.6 percent economists expected. Core inflation, which excludes volatile food and energy prices, rose 2.8 percent year over year—its smallest increase in 4 years—and less than the 3.0 percent expected.20 Durable Goods OrdersOrders of manufactured goods designed to last three years or longer increased 9.2 percent in March, higher than expected. Commercial aircraft orders drove much of the gain, with most other areas reporting lackluster orders.21 |
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The Fed |
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While the Federal Reserve did not meet in April, Fed Chair Jerome Powell gave a much-anticipated speech where he explained:22
The FOMC’s next meeting is scheduled for May 6-7. By the Numbers: American Baking |
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, or state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, timeframe, and risk tolerance. The forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged group of securities considered to be representative of the stock market in general. The Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and considered a broad indicator of the performance of stocks of technology and growth companies. The Russell 1000 Index is an index that measures the performance of the highest-ranking 1,000 stocks in the Russell 3000 Index, which is comprised of 3,000 of the largest U.S. stocks. The MSCI-EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark for the performance in major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. The Hang Seng Index is a benchmark index for the blue-chip stocks traded on the Hong Kong Stock Exchange. The KOSPI is an index of all stocks traded on the Korean Stock Exchange. The Nikkei 225 is a stock market index for the Tokyo Stock Exchange. The SENSEX is a stock market index of 30 companies listed on the Bombay Stock Exchange. The Jakarta Composite Index is an index of all stocks that are traded on the Indonesia Stock Exchange. The Bovespa Index tracks 50 stocks traded on the Sao Paulo Stock, Mercantile, & Futures Exchange. The IPC Index measures the companies listed on the Mexican Stock Exchange. The MERVAL tracks the performance of large companies based in Argentina. The ASX 200 Index is an index of stocks listed on the Australian Securities Exchange. The DAX is a market index consisting of the 30 German companies trading on the Frankfurt Stock Exchange. The CAC 40 is a benchmark for the 40 most significant companies on the French Stock Market Exchange. The Dow Jones Russia Index measures the performance of leading Russian Global Depositary Receipts (GDRs) that trade on the London Stock Exchange. The FTSE 100 Index is an index of the 100 companies with the highest market capitalization listed on the London Stock Exchange. Please consult your financial professional for additional information. Copyright 2025 FMG Suite. |
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