The Monthly Market Wrap provides an insightful analysis of treasury yields, fixed income performance, mega-cap stocks, and key economic indicators in May 2025. It also delves into housing market data and the performance of commodities.
Key Stock Market Index Performance
Stocks posted strong performances across the board including the S&P 500 and Nasdaq, which both had their best months since November 2023. The Nasdaq Composite surged 9.7%, the S&P 500 increased 6.3%, and the Dow Jones Industrial Average added 4.2%. Several companies in the semiconductor sector, including Microchip Technology (MCHP), Broadcom (AVGO) and First Solar (FSLR) helped propel indices higher with jumps of 25% or more in May.
Global markets also had a solid month; Developed EAFE Markets posted a 4.7% gain and Emerging Markets added 4.3%.
The only negative sector in May was the Health Care sector, which slipped 5.6%. The three best sectors in May were Technology (+10%), then Industrials (+8.8%), which was helped by respective 27% gains in GE Vernova (GEV) and Rockwell Automation (ROK), followed by Consumer Discretionary (+8.4%).
Economic Data
Employment
The unemployment rate stayed unchanged in April at 4.2%, and the labor force participation rate inched higher for the second-straight month up to 62.6%. Nonfarm payroll data showed that the U.S. economy added 177,000 jobs in April, lower than the downwardly revised 185,000 in March but higher than the Dow Jones estimate of 133,000.
Inflation vs. Fed Funds Rate
The US inflation rate fell to 2.31% in April, while core inflation came in virtually unchanged MoM at 2.78%. The YoY US Producer Price Index declined drastically from 3.37% in March to 2.38% in April. The US Consumer Price Index MoM rose by 0.2% after contracting in March for the first time since May 2020, and US Personal Spending increased 0.23%.
The Federal Reserve maintained its key Fed Funds Rate target range of 4.25%-4.50% at the FOMC’s May 7th meeting, the third consecutive meeting in which it has voted to do so. The next meeting will take place on June 18th, where investors again anticipate the target range to remain unchanged, according to the CME FedWatch tool.
Housing Prices and Mortgage Rates
US New Single-Family Home Sales surged 10.9% higher MoM in April, though Existing Home Sales slightly contracted by 0.5% MoM. The Median Sales Price of Existing Homes grew 2.7% in April to $414,000, retaking the same level as August 2024, but remains 3% off its all-time high.
Mortgage rates continued to stay relatively stable in May as they have throughout 2025; the 15-year Mortgage Rate was 6.03% as of May 29th, while the 30-year came in at 6.89%.
Cryptocurrencies Make Big Gains
Major cryptocurrencies posted strong rallies in May. Bitcoin surged 10.4% in May to end the month at $104,010.90, setting a new all-time high and bringing the asset class up 12.3% YTD. Ethereum jumped 40.5% in May to $2,524.48 as of May 31st, though the second-largest cryptocurrency by market cap remains down 24.9% YTD and 45.3% below its all-time high.
Fixed Income
The yield curve steepened in May as rates on Treasury instruments between 1 and 30 years increased by anywhere between 24 and 29 basis points. The 3-month treasury rate increased 5 basis points, and the 1-month fell by 2. Steepening yields caused long-duration bond funds to fall, including the iShares 20+ Year Treasury Bond ETF (TLT) which declined 3.2%.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.