June 2025 Market Update
S&P 500 surges, trade & inflation relaxation
Hope you are doing well. Last month brought us surging stocks fueled in part by progress on trade with the United Kingdom and China and inflation metrics released during the month following a similar relaxing pattern as the previous month. It has been a volatile two months, with swings in both directions, making it an opportune time to share an overview of what happened and what could be ahead.
Read on for a monthly summary of what you should know.
Major U.S. Stock Indexes
It was bulls on parade during May on Wall Street, courtesy of tariff relief hopes. The S&P 500 had its best month of May in 30 years. Here’s how major U.S. stock indexes fared in May:
- The S&P 500 rose by 6.15%.
- The Nasdaq 100 surged by 9.04%.
- The Dow Jones Industrial Average traded higher by 3.94%.
Inflation Relaxation
Inflation metrics showed more signs of relaxing in May, much like in April, even though many consumers expect it to rise due to tariffs.
Consumer Price Index (CPI): Consumer expectations notwithstanding, inflation for consumers showed signs of easing in April. CPI data indicated a monthly increase of 0.2%, leading to a 12-month inflation rate of 2.3%. This figure was below expectations and represents the lowest rate since February 2021.
Once again, shelter costs were the primary driver of the monthly increase in consumer inflation. Data indicated a 0.3% rise in shelter prices for the month, which accounted for more than half of the overall change in the CPI. Wholesale pricing, measured by the Producer Price Index (PPI), also decreased in April, falling to 2.4% from the previous 2.5%.
Core PCE: Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, was released towards the end of May, so it is the freshest piece of inflation data. It showed that Core PCE softened to 2.6% in April, matching consensus estimates.
Putting together the inflation metrics released in May, one could surmise a continuation of last month’s cooling narrative, while the full future impact of tariffs is yet to be known.
Fed Meeting
As expected, the Federal Reserve left its key overnight lending rate unchanged at 4.25% to 4.50% during its meeting in May. A cautious tone was observed, given recent economic developments that showed both areas of strength and weakness. The Fed ruled out any preemptive rate cuts related to tariffs. Federal Reserve Chair Jerome Powell emphasized the Fed’s “wait and see” approach.
Labor Market
The freshest labor/payroll data release showed a seasonally adjusted 177,000 jobs created in April, surpassing the Dow Jones estimate of 133,000. The job number was stronger than expected, even with concerns over the recently imposed blanket tariffs. Equity market reaction to the data was positive. The unemployment rate remained steady at 4.2%, indicating relative labor market stability, while average hourly earnings rose by just 0.2% for the month, shy of the 0.3% estimate.
The Consumer: Pensive, Waiting
Data from the University of Michigan indicated that consumer sentiment remained at one of the lowest levels ever recorded in May. Trade uncertainty seems to be the main factor driving the consumer’s emotions. After retail sales skyrocketed in March with consumers getting ahead of potential higher prices due to tariffs, April was a different story. Retail sales growth of 0.1% was reported for April, and the March data was revised higher to a whopping 1.7%.
April Showers Gave Us May Flowers
After a wild month of April for the financial markets, May gave us flowers. By the end of May, the broader tone had shifted away from tariff and trade fears to tariff progress. Earnings results have been solid for Q1, and the month of May closed out with NVIDIA beating revenue estimates. The tone seems like a good one to start the fresh month. But we have learned in 2025 that narratives can shift extremely quickly. While nobody can know what is ahead, the shift in narrative from April to May was a classic example of the resolve required to be a successful long-term investor.
If you would like to discuss the current market outlook and explore investment strategies based on your objectives or market developments, please feel free to contact me. I am always here when you need me!
Financial Advisor
HH Financial Planning Group
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Important letters, email, or fax messages should be confirmed by calling (608) 935-7800 or (844) 544-1374. This email service may not be monitored every day or after normal business hours. The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. Citations: Advisor Perspectives. (2025, April 25). 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Inflation slowed to multiyear low in March, but tariff bump on the horizon. https://www.forbes.com/sites/dereksaul/2025/04/30/inflation-slowed-to-multiyear-low-in-march-but-tariff-bump-on-the-horizon/#:~:text=Core%20PCE%20inflation%2 Forbes. (n.d.). FOMC meeting: What to know from the latest Federal Reserve decision. https://www.forbes.com/advisor/investing/fomc-meeting-federal-reserve/#:~:text=The%20Fed%20said,prices%20have%20grown FXStreet. (2025, May 15). US annual PPI inflation softens to 2.4% in April vs. 2.5% expected. https://www.fxstreet.com/news/us-annual-ppi-inflation-softens-to-24-in-april-vs-25-expected-202505151233 TradingView. (n.d.). Chart: DJIA Index. https://www.tradingview.com/x/OedCt9tr/ TradingView. (n.d.). Chart: Nasdaq 100 Index. https://www.tradingview.com/x/1w1gazyW/ TradingView. (n.d.). Chart: S&P 500 Index. https://www.tradingview.com/x/Uk730a7k/ Yahoo Finance. (2025, May 31). Stock market today: S&P 500 marks best May in 30 years as Wall Street bets on tariff relief. https://finance.yahoo.com/news/live/stock-market-today-sp-500-marks-best-may-in-30-years-as-wall-street-bets-on-tariff-relief-2005026 This content is for informational purposes only. You should not construe any such information or other material as investment, financial, or other advice. Nothing in this message constitutes a recommendation, solicitation, or endorsement that any particular inve Past performance is not a reliable indicator of future results. There is a risk of loss in trading and investing, including possible loss of principal. Opinions expressed are subject to change without notice in reaction to shifting market conditions. Any references to any particular securities are for informational purposes only. Seek a licensed professional for investment advice and consider your own circumstances before making any investment decisions. 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