May 30, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 marked the best month of May in 30 years driven by Wall Street’s optimism regarding tariff relief, with a notable increase of 6.2%, the highest since November 2023. The Dow added 3.9% over the month, while the Nasdaq experienced a significant rise of 9.6%. May began with a tumultuous start for stocks, as President Trump’s unpredictable trade policies kept investors on high alert. However, his softened stance on tariffs, coupled with positive earnings and moderate inflation data, enabled the S&P 500 to bounce back from its lows in April. May’s recovery has allowed the equity index benchmarks to recoup a majority of their losses for the year. However, they still remain approximately 4% to 6% below their all-time closing highs.

May 23, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The Dow Jones, S&P 500, and Nasdaq all finished the week in the red, influenced by reports of President Trump’s revived tariff threats and growing anxiety over the US deficit. For the week, the Dow declined by 2.47%, the S&P 500 decreased by 2.61%, and the Nasdaq lost 2.48%. President Trump issued threats of tariffs against the European Union and the iPhone manufacturer Apple. He indicated a potential increase in tariffs on EU imports to ‘a straight 50%’ starting June 1, as trade negotiations reached an impasse, and specifically targeted Apple with a 50% tariff on iPhones not produced in the United States. Treasury Secretary Scott Bessent remarked that Trump did not find the EU’s trade proposals to be of adequate quality. A deficit-increasing bill was approved by the U.S. House this week, even in light of another reduction in the U.S. government’s credit rating. Concerned investors pointed to increasing Treasury yields as an indication that fiscal challenges are impacting the bond market. In fact, 30-year Treasury yields surpassed 5% this week, marking the highest level since 2006.

May 16, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. For the week, the S&P 500 recorded a gain of around 5.3%, while the Nasdaq increased by 7.2% and the Dow rose by 3.4%, as Wall Street welcomed encouraging trade agreements, positive earnings, and a favorable Consumer Price Index (CPI). This week saw the announcement of trade agreements with China and various Middle Eastern nations, and the Bureau of Labor Statistics indicated that the consumer price index increased by 0.2% in April, compared to an expected rise of 0.3%, which lowered the annual inflation rate from 2.4% to 2.3%. The S&P 500 is reporting a year-over-year earnings growth of 13.4% for the first quarter, exceeding the previous estimate of 7.1%. Additionally, JPMorgan Chase & Co. has raised its forecast for US economic growth following a temporary trade agreement between the US and China, abandoning its earlier prediction that the largest economy in the world would enter a recession by 2025.

May 9, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After consecutive weekly gains, U.S. stocks experienced a general decline this week as investors faced uncertainty regarding Federal Reserve policies and ongoing global trade negotiations. The S&P 500 fell by 0.5% over the week, while the Dow Jones decreased by 0.2%, and the Nasdaq Composite also ended the week lower with a 0.3% drop. On Wednesday, the Federal Reserve decided to maintain its key interest rate as it awaits the development of the Trump administration’s trade policies and their effects on a struggling economy. In a decision that was largely anticipated given the prevailing uncertainty in the political and economic environment, the FOMC kept its benchmark overnight borrowing rate steady at a range of 4.25%-4.5%, unchanged since December. The Fed remarked, ‘Uncertainty regarding the economic outlook has further increased’ and ‘The Committee is mindful of the risks associated with both aspects of its dual mandate and assesses that the risks of rising unemployment and inflation have escalated.’ During its previous meeting in March 2025, the Fed maintained the key benchmark lending rate at 4.25% to 4.50%, while indicating the potential for two cuts of 25 basis points before the year’s end.

May 2, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In the wake of a steep decline during the first week of April, the S&P 500 mounted a vigorous recovery, driven by news of a 90-day pause in the implementation of tariffs. By the close of the weekend on May 2, 2025, the S&P 500 had achieved a 2.9% return, marking its ninth consecutive day of gains, the longest such streak since 2004. However, the S&P 500 still finished the month down 0.7%, with 10 of the 17 factor indices we monitor underperforming relative to the U.S. benchmark. Pure Growth was the best performer among these indices, rising by 2.6%, while High Dividend lagged with a decline of 5.6%. Additionally, this week, we learned that the U.S. GDP contracted at an annualized quarterly rate of -0.3%, ending a 10-quarter period of strong economic growth. Nonetheless, this appears to be more of a temporary fluctuation than a lasting trend. A detailed review of the report indicates that a significant increase in imports, as U.S. firms anticipated tariffs, detracted five percentage points from growth.