Markets rallied in May, with the S&P 500, Dow, and Nasdaq up low- to mid-single digits for the month on solid fundamentals and reduced policy worries. Further, the average earnings growth for the S&P 500 during the first quarter was 13.5 percent, more than twice the initial estimates. The economic updates were also broadly positive. The April job report revealed continued solid hiring, and inflation showed signs of improvement, as consumer prices rose by less than expected.
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Are the Bond Vigilantes Ready to Ride Again?
“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.” — James Carville
Is It a New Bull Market?
I am a firm believer that the market doesn’t like uncertainty. That reality has been seen on more than one occasion in 2025, most notably post-Liberation Day. As discussed in last week’s post, uncertainty hasn’t disappeared—even after the pause in the trade war between the U.S. and China. One of the other investing tenets I believe in is that when things look the bleakest, the market embraces less bad news. And that reality has been evident recently, with the S&P 500 rallying more than 22 percent since the year-to-date low on April 7.
The Market Observatory: It’s Wait and See for the Fed [Audio]
Last week was all about the Fed, while this week we saw developments on tariffs and a de-escalation with China. In the latest episode of the Market Observatory, Sam Millette and I unpack all the hot topics, including how the economy and markets might react to improving headlines.
Mixed Signals on the Path Ahead for U.S. Economy
Last week, I once again had the pleasure of presenting at a Commonwealth conference. As always, our advisors’ questions were well thought out, thought-provoking, and covered a lot of ground.
Market Thoughts for May 2025 [Video]
April saw significant market fluctuations driven by tariff and interest rate concerns, with the Nasdaq showing a small gain while the S&P 500 and Dow Jones finished lower. Internationally, foreign stocks rebounded after initial sharp declines, resulting in positive overall performance for developed and emerging markets. Bond markets also experienced volatility, but the 10-year Treasury yield ended slightly lower, supporting bond prices for the fourth consecutive month. While there was earnings growth for the S&P 500, declining business and consumer sentiment raised concerns about future spending.