The U.S. stock market had a strong month, largely due to the de-escalation of tariffs between the U.S. and China in mid-May. After both countries agreed to reduce tariffs for 90 days, there was a surge in investor confidence, resulting in a rally in the markets. Tensions renewed later in the month, with a resurgence of trade tensions.
The impact of tariffs will likely continue to create ongoing sensitivity of U.S. equities to international trade relations. Within the labor market, job growth decelerated, and jobless claims increased. However, the unemployment rate held steady at 4.20%, near historic lows, indicating overall job market stability. CPI continued to trend lower. However, core inflation proved to be sticky, reinforcing the Federal Reserve’s cautious stance. The US Index of Consumer Sentiment fell in May to its third lowest level on record, reflecting persistent consumer concerns over inflation and economic uncertainty.
Equity markets performed strong in May, with the broad market MSCI ACWI gaining 5.81%%. U.S. Markets performed best, gaining 6.45%.1 International Developed Markets rose 4.84%,2 and Emerging Markets increased 4.27%.3 The MSCI ACWI Diversified Multi-Factor index rose 5.86%.
Within U.S. markets, all factors performed positively. Momentum performed best, gaining 8.41%. Small Cap increased 5.80%, Quality rose 4.5%, and Value was up 2.65%.4 The MSCI USA Diversified Multi-Factor index gained 5.75%.
All sectors except for Health Care performed positively in May. Technology, Industrials, and Consumer Cyclical performed strongest, gaining 9.97%, 8.84%, and 8.38%, respectively.5
U.S. Treasury yields were volatile in May, with yields rising early in the month following strong employment and inflation data. The Treasury yield curve ended the month steeper, with yields of longer-term maturity bonds increasing. This was due to uncertain market expectations, with investor concerns of subdued economic growth and higher inflation. Corporate yield spreads tightened with Treasury yields stabilizing toward the end of the month. Risk appetite improved, leading to a narrowing of spreads.
1. US Markets represented by MSCI USA Index
2. International Developed represented by MSCI World Ex USA Index
3. Emerging Markets represented by MSCI Emerging Markets
4. Global Factors represented by MSCI USA Factor
5. Sector Performance represented by SPDR
*All data based on YCharts, June 1 2025
Past performance does not guarantee future results. All data is from sources believed to be reliable but cannot be guaranteed or warranted.
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The S&P 500 Index represents the 500 leading U.S. companies, approximately 80% of the total U.S. market capitalization. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the Nasdaq Composite Index (NASDAQ). The NASDAQ measures all NASDAQ domestic and international based common type stocks listed on The Nasdaq Stock Market and includes over 2,500 companies. The MSCI World Ex USA GR USD Index captures large- and mid-cap representation across 22 of 23 developed markets countries, excluding the United States. The index covers approximately 85% of the free float-adjusted market capitalization in each country. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets (as defined by the MSCI). The index consists of the 25 emerging market country indexes. The Bloomberg Barclays US Aggregate Bond Index measures the performance of the U.S. investment grade bond market. The index invests in a wide spectrum of public, investment-grade, taxable, fixed-income securities in the United States—including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year. The Bloomberg Barclays Global Aggregate (USD Hedged) Index is a flagship measure of global investment grade debt from 24 local currency markets. This multi-currency benchmark includes treasury, government-related, corporate, and securitized fixed-rate bonds from both developed and emerging market issuers. The Index is USD hedged.