Monthly Market Update for May 2025
Key Points – Monthly Market Update for May 2025
- Stocks Surge in May Following De-escalation of Tariffs between U.S. and China
- Trade Headline Volatility Continues
- Big Tech and Large-Cap Growth Highlight Sector/Style Performance
- Difficult Month for Fixed Income Markets
- 2-Minute Read | 2-Minute Watch
Recorded on June 6, 2025 (Data as of May 31, 2025)
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Monthly Market Update for May 2025
Welcome to the Modern Wealth Market Update for May 2025, where we take a quick look at stocks, bonds, and the economy. Stocks were higher in May, as the S&P 500 posted its best month since November 2023.1 The de-escalation of tariffs between the U.S. and China was the big upside catalyst.
FIGURE 1 – S&P 500 Index – Monthly Returns – Monthly Market Update for May 2025
The U.S. agreed to a 90-day cut of tariffs on Chinese goods and came to an agreement with the UK to cut tariffs.2 The White House has repeatedly said it is close to deals with partners including Japan, South Korea, and India.3
Some of Trump’s tariffs were blocked by the U.S. Court of International Trade, but they were soon reinstated.4 Despite the reprieve, trade headline volatility remains the key market overhang.
Sector and Style Performance
Let’s look now at sector and style performance within the market. Big tech was a standout, as Tesla and Nvidia were both up over 20% for the month.5 Other outperformers included the Communication Services and Consumer Discretionary sectors. The only negative sector of the month was Healthcare, where there were investor concerns over potential changes in Medicare reimbursement policies.
FIGURE 2 – S&P 500 Index – Sectors – Monthly Market Update for May 2025
Large-cap growth rebounded in May and clawed back to breakeven for the year. Small-cap companies, both growth and value continue to lag.
FIGURE 3 – U.S. Equity Returns – Size & Style – Monthly Market Update for May 2025
Global Equity Returns
Outside the U.S., the European stocks have had an incredible year so far. The UK and France are up over 17% year-to-date, and Germany is up over 30% after another great month. This European outperformance has been due to a combination of factors, including strong corporate earnings, lower valuations, and projections of increased defense spending.
FIGURE 4 – Global Equity Returns – Country – Monthly Market Update for May 2025
Bond Market Update
Last, but not least, we turn to the fixed income markets, which had a difficult month. U.S. Treasuries were weaker across the curve, with the policy-sensitive 2-year yield up over 30 basis points, and the 10-and 30-year yields up around 25 basis points.6 The 10-year yield has been edging closer to 5% mark, where federal budgets and debt refinancing costs become increasingly uncomfortably for the Treasury Secretary.
FIGURE 5 – U.S. Bond Market – Monthly Market Update for May 2025
Have Any Questions About Our Monthly Market Update for May 2025?
That concludes your market update for May. If you have any questions about what I covered in our Monthly Market Update for May 2025, start a conversation with our team below.
Resources Mentioned in This Article
Other Sources
[6] https://www.ustreasuryyieldcurve.com/
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The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.