Markets continued to rally in May, largely rebounding from the early-April tariff woes.
Progress in trade negotiations between the US and European Union, along with temporary delays for additional global tariff hikes, helped fuel equities. While trade policy remained forefront, cooling inflation and strong labor market data also helped provide support for markets.
The tech-heavy Nasdaq 100 led the way higher, gaining 9.13%, as strong earnings reports boosted AI-focused companies. The S&P 500, CRSP US Small Cap Index, and Dow Jones Industrial Average also ended the month higher, finishing with gains of 6.29%, 5.55%, and 4.16% respectively. Growth outperformed value as a style for the month, with cyclical sectors outpacing more defensive sectors.
International stocks also experienced a strong month, though they trailed their US counterparts. Developed international stocks gained 5.13% and emerging markets were up 3.87%, as a steady dollar capped gains. Despite lagging for the month, international markets are leading the way on a year-to-date basis, with strong earnings and expected fiscal support leading to stronger sentiment overseas.
As equities moved broadly higher, bonds faced some headwinds in May. Aggregate US bonds finished the month with a loss of 0.72% as the 10-year Treasury yield rose from 4.17% to 4.41%, pressuring bond prices. Yields were pushed higher following a US credit downgrade mid-month, but finished well off the high of 4.58%. While traditional bonds faced some pressure, higher-yielding bonds fared better, following riskier asset classes higher.
There are still plenty of unknowns at the moment, but May highlighted just how important it is to have a plan in place you can stick with for the long-run. Markets are forward looking, and conditions can change quickly. It’s important to avoid making decisions based on short-term noise and headlines. Having a well-diversified portfolio that can navigate both favorable and unfavorable markets can help lead to better investment outcomes.
At the young age of just 94, Warren Buffett has announced his retirement.
After five hours of question and answer at his annual shareholder meeting, in front of a crowd of close to 20,000 attendees, Buffett said he’ll be stepping down at the end of 2025.
The news was so surprising even his handpicked successor Greg Abel didn’t get the memo prior.
To say he had a good run would be an understatement. Buffett took over struggling textile company Berkshire Hathaway in 1965 and transformed it into a $1 trillion conglomerate over the next six decades.
In that time, Berkshire’s stock increased at a rate of 19.9%, compared to a 10.4% annual return for the S&P 500.
So what’s next for the Oracle of Omaha? Buffett said he’d “still hang around, and could conceivably be useful in a few cases.”
What in the World is going on here?
In 2023 OpenAI CEO Sam Altman, known for creating ChatGPT, launched a venture called World.
The project seeks to distinguish humans from AI by conducting biometric eye scans via a device called the Orb.
With more than 12 million people having participated around the world so far, the Orbs are now being brought to the US with six cities participating – Atlanta, Austin, Los Angeles, Miami, Nashville, and San Francisco.
Beyond the sci-fi dystopian use case, Altman is hoping for more practical uses for the project in the present.
The company is partnering with Match Group to provide age verification on dating apps, and it’s launching a credit card with Visa sometime later this year as well.
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 6.28% | -0.49% | 0.90% | 13.29% |
| NASDAQ (QQQ) | 9.18% | 2.31% | 1.69% | 15.88% |
| Large Cap Growth (VUG) | 9.21% | 1.96% | 0.79% | 18.40% |
| Large Cap Value (VTV) | 2.95% | -3.22% | 1.83% | 8.83% |
| Small Cap Growth (VBK) | 6.40% | -3.37% | -5.65% | 6.04% |
| Small Cap Value (VBR) | 5.00% | -3.83% | -4.02% | 2.81% |
| Developed International (VEA) | 5.13% | 9.33% | 16.77% | 12.59% |
| Emerging Markets (VWO) | 3.87% | 5.18% | 6.83% | 12.61% |
| REITs (VNQ) | 1.12% | -3.90% | 1.30% | 11.75% |
| Aggregate Bonds (BND) | -0.67% | -0.27% | 2.49% | 5.12% |
| Corporate Bonds (VCIT) | 0.31% | 0.74% | 3.36% | 6.91% |
| High Yield Bonds (JNK) | 1.84% | 0.41% | 2.72% | 8.62% |
| Long Term Treasuries (VGLT) | -2.94% | -4.75% | 0.73% | 0.35% |
| International Bonds (BNDX) | 0.01% | 0.52% | 1.66% | 6.27% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- The word “bookkeeper” is the only unhyphenated English word with three consecutive double letters.
- The world’s largest butterfly, Queen Alexandra’s birdwing, has a wingspan of around 10 inches.
- The longest sentence ever published in a novel is found in Jonathan Coe’s The Rotters’ Club. It contains 13,955 words and spans 33 pages.
- Where do dad’s get all their jokes? Their dad-a-base… Father’s Day is on June 15th!
– The Aspire Wealth Team
Weekly Wake-Up
