“In the stock market, the most important organ is the stomach, not the brain.”
-Peter Lynch
Here’s what you need to know this week:
· Stocks post strong gains for the month of May
· Tariff tensions return in a big way
Sell in May? No Way
Stocks rose slightly last week to close out a stellar month of returns in May. On the month, the S&P 500 rose more than 4%, the Dow Jones climbed 4% and the NASDAQ gained nearly 10%. This marked the best returns in the month of May since 1990 and the best returns for any month since November 2023[1]. This year clearly contradicts the old Wall Street axiom “sell in May and go away”, referring to the month’s historically subpar returns.
Of course, May’s outstanding performance comes on the heels of the steep selloff in April that was triggered by the tariff announcement. Much of the market rebound came as tensions cooled and trade deals seemed imminent, although tariff negotiations have become more fraught in the last week (more on that in a moment). Another source of uncertainty is economic data that may be impacted by tariffs but moves on a lag, particularly inflation and employment.
Last week we received the Personal ConsumptionExpenditures (PCE) report for the month of April. The PCE report is the Federal Reserve’s preferred measure of inflation, and the report showed annualized inflation closing in on the Fed’s target of 2% annualized:
However, Fed officials have warned that the impact of tariffs on inflation will likely not show in the data until the May-June reports, so analysts are optimistic about this report but are still parsing current data as for clues to the next report.
Standoff
President Trump announced a new suite of tariffs targeting China and the European Union late Friday evening, throwing the ongoing negotiations into turmoil. The first announcement was a 50% tariff on steel and aluminum, doubling the 25% rate originally announced in April[2]. Negotiators from the US and EU will meet later today at the Organization for Economic Cooperation and Development (OECD) conference in Paris in an attempt to hammer out a deal[3].
The larger uncertainty right now is the state of trade relations with China. On Friday President Trump accused China of violating “a big part of the agreement we made”. US Trade Representative Jamieson Greer told reporters later that day that China has not sped up the delivery of critical manufacturing minerals according to an agreement made in Geneva last month[4].
China was quick to respond, accusing the US of being the party that broke the agreement and vowed to “take measures to defend its economic interests”. President Trump responded by extending an exemption on Chinese GPUs until August 31st, indicating a willingness to negotiate[5]. Multiple senior US officials have said they expect a call directly between President Trump and Chinese President Xi Jinping in the next few days, which would be the first direct call between the two since Trump began his second term.
Markets have risen this week in anticipation of more tariff resolution in the coming days but a deal is still far from certain. For now, US-Chinese trade will continue to be the main market driver.
What Else
· The Senate will begin discussing President Trump’s tax bill this week
· US officials have begun negotiations with Iran on the terms of a new nuclear deal
· Ukraine devastated Russian airbases with a widespread and coordinated drone attack known as “Operation Spiderweb”
· Combat has flared again in Gaza after Israel and Hamas failed to agree on terms of a ceasefire
· Wildfires in Canada have forced thousands to evacuate and have cast smoke over the upper Midwest
· The OKC Thunder tip off against the Indiana Pacers in the NBA Finals tomorrow night at 7:30 PM CT on ABC
What We’re Reading
A semi-truck overturned in rural Washington on Saturday and released a most unusual payload: more than 250 millionbees as well as 70,000 pounds of pollinator hives. Officials have told locals to avoid the area for the next few days as they allow the bees to locate their queen so they can be loaded back onto a new truck. Click below to read more about the story and see photos of the incredibly large swarm:
· https://www.bbc.com/news/articles/c23mrprk952o
What’s Happening Downtown
The OKC Holiday Pop-Up Market returns to Midtown this Saturday, June 6th. This event occurs once every three months, is free to attend and features more than sixty local vendors as well as live music performances across Midtown. Click below to learn more:
· https://www.okcpopups.com/market
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Jenni Hess
Sources: [1] Yahoo! Finance [2] Bloomberg [3] Reuters [4] Bloomberg [5] USTR