executive Summary:
- US Equity is broadly more in May
- Tariff’s de-siscality between America and China is a major catalyst
- Positive income surprise for large cap is reported to be higher than an average of 10-year
- Vikas out of Washington dominate the headlines
Index Performance for May:
In May, significant benefits were observed in the US stock market, with Dow Jones 3.94%, S&P 500 to 6.15%, Nasdaq 9.56%and Russell 2000 to 5.20%. The D-Susculation of tariffs between the US and China was a major catalyst, the best month for S&P 500 and Nasdaq since November 2023. Big tech stocks performed better, while other areas such as semiconductors, travel and holidays, autos and software also saw strong benefits. However, managed care, pharma, China tech, homebuilders, large oil companies, food and telecommunications were reduced.
Crossing the treasury across the curve was weak, 2 years yield more than 30 basis points and 10 and 30-year yield up to about 25 basis points. Both the dollar index and the gold declined by 0.1%, while bitcoin futures increased by 11%and WTI crude increased by 4.4%. Despite the positive trade development, the trade headline instability remained a major market, affecting tariffs with challenges in negotiations and court decisions. Despite these uncertainty, the fast was supported by a pickup in flexible corporate margin, strong AI-operated income, strong consumer data and M&A and IPO activity.
The performance of the field with technology, communication services, consumer discretionary, and industrial is diverse. Healthcare, energy, real estate, consumer staples, materials, utilities and financials lagged behind. The backup in the treasury yield was inspired by concerns about the budget deficit, inflation and rapid fed fed. The increase in corporate income for Q1 was strong, S&P 500 companies reported an increase of 12.5%, although many issued negative EPS guidance due to tariff effects. Overall, May was a dynamic month for markets, marked by positive trade development and strong corporate performance.
Major Economic Data Trends in May 2025:
- Labor Market:
- mixed signals: The increase in early and continuous unemployed claims reveals some tenderness in the labor market. However, the unemployment rate remains stable at 4.20%, indicating overall stability. The decline in nonform payroll leads to a slow development of growth.
- Manufacturing and services:
- Manufacturing weakness: The ISM manufacturing index fell below 50, indicating contractions in the manufacturing sector. S&P Global US Manufacturing PMI was also flat, suggesting a stable increase.
- Service sector flexibility: The ISM services improved the index, showing an increase in the service sector, although S&P Global US Services PMI indicated mixed performance.
- Inflation and Prices:
- Moderate inflation: Both CPI and PPI data show a slight decrease in inflation rates year-on-year, suggesting that inflation pressure may decrease. The core PCE price index also indicates a slight decline, which can be a positive signal for consumers.
- housing market:
- Mixed Housing Data: The sales of the current house declined, while the new house sales increased, indicating various performances in the housing market. The decline in construction permits suggests a possible future weakness in housing construction.
- consumer sentiment:
- Better confidence: The Consumer Confidence Index of the Conference Board saw a significant growth, showing a better consumer spirit. However, the Michigan Sentment Index University recorded a decline, pointing to some consumer concerns.
Total return for sector performance May:
Earning Comment:
S&P 500 reported strong results for Q1 2025. According to factset data, the percentage of companies reporting positive income is surprising and the magnitude of these wonders has exceeded their 10 years average.
For Q1 2025, 78% of the S&P 500 companies reported a positive EPS surprise and 64% reported a positive revenue surprise, which increased the growth rate of year-by-year earnings by 12.50%, which marks the second quarter of a continuous double-digit growth. Initially, 31 March is estimated at 7.2%Scheduled tribeTen areas reported high earnings due to positive EPS surprise. For the next quarter, 51 companies issued negative EPS guidance while 43 issued positive guidance. The 12-month P/E ratio for S&P 500 is 21.3, which is above a 5-year average of 19.9 and above an average of 10-year, above 18.4, indicating high market evaluation.
Results of sales and income by S&P sector:
2-day price reaction releases after income:
Fed Fund Futures are pricing in 95+% likely to a hold in June meeting,
10-year-old Treasury Continuous Maturity Minus 2-Year Treasury Continuous Maturity:
Sleep:
Oil:
Dxy:
Bitcoin:
looking ahead:
This week the market will be focused on Friday’s nonform payroll report for May. Economists have predicted unemployment rate of 4.2% with 128,000 new jobs. Reading will come in the form of new and continuous unemployed claims. Outside Washington, tariffs will now dominate the market spirit in the headlines that the earnings season stops. On 20 June, we have the “Triple Witch” option expiry and S&P index rebelling. Finally, on 27 June, in The Close, we have an annual Russell restructuring, which is traditionally one of the highest equity volume days of the year.
Economic Calendar for June:
The information contained here is provided only for informative and educational purposes, and nothing vested here should be done as an investment advice on behalf of any particular security or overall investment strategy. All the information vested here is considered accurate and reliable by Nasdaq by Nasdaq. However, all information is provided “like” without any kind of warranty. Advice from a securities professional is strongly advised.
