MARKET RECAP:

• U.S. Stock Market Performance: The S&P 500 posted its strongest monthly gain since November 2023, rising about 6.2% in May, while the Nasdaq surged 9.6%. Despite a volatile session on May 30, the S&P 500 ended nearly flat, reflecting mixed reactions to Trump’s tariff rhetoric. On May 27, U.S. stocks soared, with the Dow up 1.78%, S&P 500 up 2.05%, and Nasdaq up 2.47%, fueled by Trump’s decision to delay a 50% tariff on EU goods until July 9, boosting consumer confidence. However, markets faced uncertainty later in the week as Trump accused China of violating a tariff agreement, escalating trade tensions.
• Tariff Developments: Trump’s tariff policies were a focal point. On May 27, a U.S. Court of International Trade ruling blocked most of Trump’s “reciprocal” tariffs, citing overstepped authority, which initially lifted markets. However, on May 30, a federal appeals court reinstated most of these tariffs, creating uncertainty. Investors speculated on the “TACO” trade (Trump Always Chickens Out), expecting Trump might soften his stance, but concerns persisted about alternative import duty measures. A key date to watch is June 5, when plaintiffs in the tariff case must respond to the appeals court.
• Corporate Earnings and Sector Impacts: Nvidia’s earnings on May 28 were a major driver, with revenue of $44.1 billion beating estimates but falling short on adjusted EPS due to a ban on H20 unit shipments to China. Nvidia’s stock rose 3% in extended trading, contributing to a 24% monthly gain. Gap Inc. shares dropped after forecasting a multimillion-dollar hit to 2025 operating income from tariffs, though it maintained its forecast. Broadcom saw strong demand for AI-related chips, projecting a 44% year-over-year AI revenue increase for Q2 2025. Chip designers like Cadence and Synopsys fell after reports of U.S. restrictions on software sales to Chinese firms.
• Economic Indicators: Consumer confidence rebounded in May as trade tensions eased, though concerns about stagnating incomes persisted. U.S. markets showed resilience, with a 1.2% weekly gain and 12% annual increase, supported by expectations of 14% annual earnings growth. The CBOE Volatility Index (VIX) rose 1.9% to 19.31 on May 29, reflecting heightened uncertainty. Gold prices, volatile around $3,200 in mid-May, were seen as a hedge against instability, with potential for new highs if trade tensions worsened.
• Global Markets: European markets reacted positively to the U.S. tariff block on May 27, with the Stoxx Europe 600 and other indices advancing. In Asia, Japan’s Nikkei 225 fell 1.22% on May 30 amid high inflation (3.6% core in April), while South Korea’s Kospi dropped 0.84%. Germany’s inflation hit 2.1% in May, slightly above estimates.
• Other Developments: The Federal Reserve’s May minutes raised concerns about the U.S. losing its status as a global financial safe haven due to tariffs. Bond yields soared amid gaping budget deficits, adding to market jitters. Investors awaited key data releases in early June, including PMI Manufacturing, unemployment rates, and the Fed’s Beige Book.

(highlights above provided by Grok)