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%).

The YoY Producer Price Index fell one percentage point from 3.37% in March to 2.38% in April (the latest data available) while inflation and core inflation both continue to remain below 3%. The Federal Reserve voted to maintain its key Fed Funds Rate target range of 4.25%-4.50% at the third consecutive FOMC meeting. The price of Gold was virtually unchanged in May, breaking a four-month win streak. However, shares of GLD stayed above $300 for the second straight month.

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%.

Off the YCharts! US Consumer Sentiment Index Plummets to Third-Lowest Level Ever
Though it was a big month for equities, consumer sentiment greatly soured this month. The US Index of Consumer Sentiment fell to 52.20 in May 2025, its third lowest level on record, just higher than May 1980 (51.70) and June 2022 (50.00).

Notably, high inflation occurred during the latter two periods, and consumer sentiment index improved once inflation cooled down in both instances. But despite inflation staying below 3% throughout 2025, the index has nosedived from 74.00 in December 2024 to 52.20.

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