Steady Progress, But Storm Clouds Linger
May 30, 2025
As we close out May 2025, U.S. equity markets have shown notable resilience despite ongoing geopolitical and trade policy uncertainties. The S&P 500 has bounced back from some earlier weakness and is now hovering near the 5,900 mark, showing signs of renewed investor confidence. The Dow Jones Industrial Average, while still down about 2.5% year-to-date, has stabilized somewhat after a choppy first quarter. The Nasdaq continues to lead the charge, largely thanks to sustained strength in technology stocks, especially AI and semiconductor sectors. Overall, sentiment is cautiously optimistic. Investors are carefully watching economic data, earnings reports, and policy developments, weighing near-term risks against longer-term growth potential.
Trade Policy Developments
Trade issues have moved back into the spotlight over the past two months. In May, a federal appeals court reinstated tariffs introduced during the Trump administration, reversing a previous court ruling that had blocked them. This has reintroduced a layer of complexity for companies with global supply chains. At the same time, the U.S. and China agreed to a temporary 90-day reduction in select tariffs, which markets welcomed as a cooling measure in an otherwise tense trade landscape. While these adjustments have brought some short-term relief, the broader trade environment remains uncertain. Global supply chain disruptions and shifting policy stances are keeping businesses and investors on their toes.
Federal Reserve and Economic Indicators
The Federal Reserve held rates steady at its May meeting, maintaining the federal funds rate between 4.25% and 4.5%. The decision reflects the Fed’s wait-and-see approach as it tries to balance signs of persistent inflation with slower economic growth. There’s increasing talk of stagflation — a combination of high inflation and stagnant growth — especially as consumer spending begins to soften and wage growth levels out. Despite these concerns, the labor market remains relatively strong, with unemployment figures still at historically low levels. The Fed made it clear they’ll remain data-dependent, carefully watching inflation trends, employment numbers, and consumer confidence before making their next move.
Looking Ahead: Key Dates
June and early July will bring a series of important data releases and policy updates that could shape the market narrative for the rest of the summer:
June 5: U.S. International Trade in Goods and Services Report
June 17: Retail and Food Services Sales data
June 26: Second estimate of Q1 GDP
July 3: June Employment Situation Report
July 9: EU Tariff Deadline
July 15: Consumer Price Index (CPI) release
July 30: FOMC meeting and advance estimate for Q2 GDP
These events will be closely watched for signs of economic momentum, or lack thereof, and could prompt shifts in market positioning. We’ll be monitoring each closely and will provide insights as the data comes in.