The month of May brought us surging stocks fueled in part by progress on trade with the United Kingdom and China and inflation metrics released during the month following a similar relaxing pattern as the previous month.

It has been a volatile two months, with swings in both directions, making it an opportune time to share an overview of what happened and what could be ahead. Read on for a monthly summary of what you should know.

Major U.S. Stock Indexes

It was bulls on parade during May on Wall Street, courtesy of tariff relief hopes. The S&P 500 had its best month of May in 30 years.

Here’s how major U.S. stock indexes fared in May:

• The S&P 500 rose by 6.15%.
• The Nasdaq 100 surged by 9.04%.
• The Dow Jones Industrial Average traded higher by 3.94%.

Inflation Relaxation

Inflation metrics showed more signs of relaxing in May, much like in April, even though many consumers expect it to rise due to tariffs.

Consumer Price Index (CPI)

• Consumer expectations notwithstanding, inflation for consumers showed signs of easing in April. CPI data indicated a monthly increase of 0.2%, leading to a 12-month inflation rate of 2.3%. This figure was below expectations and represents the lowest rate since February 2021.
• Once again, shelter costs were the primary driver of the monthly increase in consumer inflation. Data indicated a 0.3% rise in shelter prices for the month, which accounted for more than half of the overall change in the CPI.
• Wholesale pricing, measured by the Producer Price Index (PPI), also decreased in April, falling to 2.4% from the previous 2.5%.

Core PCE

• Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, was released towards the end of May, so it is the freshest piece of inflation data. It showed that Core PCE softened to 2.6% in April, matching consensus estimates.

Putting together the inflation metrics released in May, one could surmise a continuation of last month’s cooling narrative, while the full future impact of tariffs is yet to be known.

Fed Meeting

• As expected, the Federal Reserve left its key overnight lending rate unchanged at 4.25% to 4.50% during its meeting in May.
• A cautious tone was observed, given recent economic developments that showed both areas of strength and weakness. The Fed ruled out any preemptive rate cuts related to tariffs.
• Federal Reserve Chair Jerome Powell emphasized the Fed’s “wait and see” approach.

Labor Market

• The freshest labor/payroll data release showed a seasonally adjusted 177,000 jobs created in April, surpassing the Dow Jones estimate of 133,000.
• The job number was stronger than expected, even with concerns over the recently imposed blanket tariffs.
• Equity market reaction to the data was positive. The unemployment rate remained steady at 4.2%, indicating relative labor market stability, while average hourly earnings rose by just 0.2% for the month, shy of the 0.3% estimate.

The Consumer: Pensive, Waiting

• Data from the University of Michigan indicated that consumer sentiment remained at one of the lowest levels ever recorded in May. Trade uncertainty seems to be the main factor driving the consumer’s emotions.
• After retail sales skyrocketed in March with consumers getting ahead of potential higher prices due to tariffs, April was a different story.
• Retail sales growth of 0.1% was reported for April, and the March data was revised higher to a whopping 1.7%.

April Showers Gave Us May Flowers

• After a wild month of April for the financial markets, May gave us flowers. By the end of May, the broader tone had shifted away from tariff and trade fears to tariff progress.
• Earnings results have been solid for Q1, and the month of May closed out with NVIDIA beating revenue estimates.
• The tone seems like a good one to start the fresh month. But we have learned in 2025 that narratives can shift extremely quickly. While nobody can know what is ahead, the shift in narrative from April to May was a classic example of the resolve required to be a successful long-term investor.

If you would like to discuss the current market outlook and explore investment strategies based on your objectives or market developments, please feel free to contact our team.

Thank you for reading!

The Trademark Capital® Team

This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.