The phrase "Sell in May and go away" suggests investors should exit positions in May and return in November based on seasonal performance.
Historically, markets have shown stronger average returns from November through April compared to May through October. Many attribute this to lower trading volumes and changing investor sentiment during summer months.
This highlights a seasonal trend, but in May 2025 the S&P 500 rose over 5%, underscoring that the adage isn’t foolproof.
Market Wrap
Consumer Confidence Up, Tariffs & Deficits Cloud Outlook
Trump Accuses China of Violating Tariff Truce:
Former President Trump publicly stated that China had “totally violated” the recently agreed-upon 90-day tariff truce, pointing to halted shipments of critical minerals. U.S. Trade Representative Jamieson Greer echoed these concerns, and Treasury Secretary Scott Bessent warned that trade talks were “a bit stalled.”
Release of New Budget Bill with Section 899:
The Trump administration unveiled a draft budget that includes Section 899, proposing new taxes on foreign investors, along with significantly increased government borrowing. Market strategists cautioned that higher fiscal deficits and potential shifts in foreign capital flows could put upward pressure on bond yields and weigh on stock valuations going forward.
Consumer Sentiment (May 2025):
The University of Michigan’s preliminary May survey showed the Consumer Sentiment Index climbed to 52.2 from 50.8 in early May, lifting the current conditions gauge to 58.9 and six-month expectations to 47.9. Although still below year-ago levels, this uptick was largely attributed to a temporary easing of U.S.-China trade tensions.
Personal Income and PCE Inflation (April 2025):
The U.S. Bureau of Economic Analysis reported that personal income rose 0.8% in April, well above the 0.3% forecast, boosted by a surge in wage growth and increased Social Security payments. Meanwhile, the PCE price index—the Federal Reserve’s preferred inflation gauge—cooled to 2.1% year-over-year, with core PCE at 2.5%, the lowest since March 2021, driving expectations for potential Fed rate cuts later this year.
Pending Home Sales (April 2025):
According to the National Association of Realtors, pending home sales fell 6.3% in April—the largest drop in several months—as higher mortgage rates and supply constraints continued to weigh on residential real estate. This decline fed into broader concerns about consumer spending and housing-related sectors, putting modest downward pressure on homebuilder and mortgage-related stocks.
OPEC+ Meeting Scheduled:
Eight core OPEC+ members agreed to convene on Saturday, May 31, 2025, one day earlier than initially planned, to finalize July output levels—potentially approving a production hike larger than the current 411,000 bpd increment. Markets priced in the prospect of a bigger supply increase, which drove oil prices down toward a four-year low before rebounding slightly.
Costco Wholesale Corp. shares jumped 3% following stronger-than-expected Q3 earnings, as the retailer reported robust same-store sales growth and revenue that exceeded analysts’ estimates.
Palantir Technologies Inc. shares rose 7.7% after the company secured a significant federal government contract, boosting optimism around its AI-powered analytics platform.
Intel Corp. shares declined as investors digested disappointing guidance in an industry downturn spurred by tariffs and slowing demand for PCs and servers.
Marvell Technology Inc. shares dropped amid a sector-wide sell-off after weak earnings from leading chipmakers and concerns about U.S.-China trade tensions.
The Cooper Companies Inc. shares dropped 15% one day after the company lowered its full-year growth forecast, prompting concerns over rising costs and slowing demand in its contact lens business.
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