executive summary:
- In May, US stocks were widely raised.
- Tariff emissions between the US and China are major catalysts
- Reported positive revenue surprises for large caps are above the 10-year average
- Development from Washington continues to dominate the headlines
Index Performance in May:
In May, the US stock market saw significant profits, with Dow Jones increasing by 3.94%, the S&P 500 increasing by 6.15%, the Nasdaq increasing by 9.56% and the Russell 2000 increasing by 5.20%. Tariff emissions between the US and China have been a major catalyst that has led to the best months on the S&P 500 and NASDAQ since November 2023. Meanwhile, other sectors such as semiconductors, travel, leisure, automobiles and software also brought strong benefits. However, there are poorly managed care, pharma, Chinatech, home builders, oil majors, food and drinks, and communications.
The Treasury has been weak across the curve, with two-year yields above 30 basis points and yields increased by around 25 basis points over 10 and 30 years. Both the dollar index and gold fell by 0.1%, while Bitcoin futures rose 11% and WTI crude increased by 4.4%. Despite aggressive trade developments, trade headline volatility remained a key market overhang with ongoing challenges in negotiations and court decisions affecting tariffs. Despite these uncertainties, bullish sentiment was supported by resilient corporate margins, strong AI-driven revenue, robust consumer data, and pickups of M&A and IPO activities.
Sector performance was varied by technology, communications services, consumer discretion, and industry leading the way. Healthcare, energy, real estate, consumer staples, materials, utilities and finances are behind. The Treasury yield backup was driven by budget deficits, inflation and increasingly Takis Fed concerns. The growth in corporate revenues for the first quarter was strong, with S&P 500 companies reporting 12.5% growth, but many issued negative EPS guidance due to the impact of tariffs. Overall, May was a dynamic month for the market, marked by aggressive trade development and robust corporate performance.
Major economic data trends for May 2025:
- Labor Market:
- Mixed Signal: The increase in early and continuous unemployed claims suggests softness in the labour market. However, the unemployment rate remains stable at 4.20%, indicating overall stability. A decline in non-farm payroll indicates a slower job creation.
- Manufacturing and Services:
- Manufacturing weaknesses: The ISM manufacturing index is below 50, indicating a contraction in the manufacturing sector. The S&P Global US Manufacturing PMI also remains flat, suggesting stagnant growth.
- Service sector resilience: The ISM Service Index has improved and demonstrated growth in the service sector, while the S&P Global US Services PMI has declined and mixed performance.
- Inflation and price:
- Moderates inflation: Both CPI and PPI data show a slight decline in inflation compared to the previous year, suggesting that inflation pressures may be eased. The Core PCE Price Index also shows a slight decline, which could be a positive sign for consumers.
- Housing Market:
- Mixed housing data: While existing home sales have declined, new home sales have increased, indicating a change in performance in the housing market. The decline in building permits suggests potential weaknesses in the future for home construction.
- Consumer sentiment:
- Improve your confidence: The Conference Committee’s Consumer Trust Index saw a significant increase, reflecting improvements in consumer sentiment. However, the University of Michigan Sentiment Index has declined, indicating consumer concerns.
Total revenue for sector performance in May:
Revenue Commentary:
The S&P 500 reported strong results for the first quarter of 2025. According to FactSet data, the percentage of companies report positive revenue surprises and the magnitude of these surprises are above the 10-year average.
In the first quarter of 2025, 78% of S&P 500 companies reported positive EPS surprises and 64% reported positive revenue surprises, indicating that they had a double-digit quarterly growth with a combined year-over-year revenue growth of 12.50%. It was initially estimated at 7.2% on March 31st.st10 sectors reported higher revenues as EPS surprises were positive. In the next quarter, 51 companies issued negative EPS guidance and 43 companies issued positive guidance. The S&P 500’s forward 12-month P/E ratio was 21.3, surpassing both a five-year average of 19.9 and a 10-year average of 18.4, indicating a high market rating.
Results of sales and revenue from the S&P sector:
2 days of price response after revenue release:
Fed fund futures are priced at Jun Meeting with a 95% or higher chance:
10-year Ministry of Finance’s constant maturity is minus a 2-year financial maturity:
gold:
oil:
dxy:
Bitcoin:
Future headlines:
The focus of this week’s market is on the non-farm salary report for Friday in May. Economists predict that the unemployment rate will remain at 4.2%, with 128,000 new jobs being added. Reading comes as new and continuous unemployed claims continue to grow. Tariff headlines from Washington continue to dominate market sentiment now that the revenue season is closing. On June 20th, there will be a rebalancing of the “Triple Witch” option with the S&P index. Finally, the annual Russell Reconstitution will be at the end of June 27th.
June economic calendar:
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