Insights

May Market Review

June 18, 2025

Kaleb Fontenot, AAMS®

Associate Advisor at Rolling Hills Advisors

How did the Markets Perform Last Month?

S&P 500
6.2%

NASDAQ
9.6%

DOW 30
3.9%

All economic numbers and information discussed in this article are provided by our research partners Bespoke and YCharts.

“The stock market is designed to transfer money from the Active to the Patient.” — Warren Buffett

If there was ever a month that showcased the wisdom of the Oracle of Omaha, May 2025 delivered. Despite a barrage of negative headlines—ranging from tariff disputes and inflation data to consumer spending slowdowns and bond volatility—investors who stayed the course were handsomely rewarded. Buffett’s remark, often seen as clever market banter, became a case study in real time.

The stock market surged across the board. The S&P 500 rose 6.2%, marking its best May since 1990, while the Nasdaq Composite soared 9.6%, its strongest performance for the month since 1997. The Dow Jones Industrial Average also fought off the negative impact of the United Healthcare debacle and posted impressive gains, climbing 3.9%—its best May in five years (UNH makes up 4.36% of the DJIA).

A significant driver behind the rally was first-quarter earnings season. According to J.P. Morgan, 97% of S&P 500 companies had reported by the end of May, with 77% exceeding earnings expectations and 63% surpassing revenue estimates. Earnings grew by 12.4% compared to the previous year, signaling broad corporate strength.

Trade policy once again took center stage, as outlined in The Wall Street Journal. Early in the month, optimism surged after a 90-day tariff pause between the U.S. and China was announced, and the European Union agreed to delay a 50% tariff increase until July. However, by month’s end, tensions reignited after President Trump accused China of violating trade agreements. While these developments injected short-term volatility into the markets, they ultimately failed to derail the overall upward momentum.

Bond markets told a different story. Fixed income struggled in May, with the Bloomberg Global Aggregate Bond Index falling 0.4%. A key factor was Moody’s downgrade of U.S. sovereign credit, which triggered a sell-off in long-duration bonds and raised concerns about fiscal discipline. Even so, high-quality diversified bonds continued to provide balance within diversified portfolios.

Ultimately, May 2025 reinforced the idea that long-term success in investing is rarely about reacting quickly—it’s about positioning wisely. While markets were rattled by headlines about tariffs, inflation, and Fed expectations, they were steadied by resilient earnings and a patient approach. Buffett’s quote didn’t just set the tone for the month—it defined the outcome. As we move forward into summer, uncertainty remains, but May offered a compelling reminder: in investing, it’s not the fast movers who win—it’s the patient ones.

Sources:

This commentary is provided for informational and educational purposes only. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind.

The opinions and forward-looking statements expressed herein are not guarantees of any future performance and actual results or developments may differ materially from those projected. The information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.

Asset allocation and diversification are investment strategies designed to help manage risk, but they do not ensure a profit or protect against loss in a declining market. There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results, and nothing herein should be interpreted as an indication of future performance. Please consult your financial professional before making any investment or financial decisions.

Equity securities are subject to price fluctuation and investments made in small and mid-cap companies generally involve a higher degree of risk and volatility than investments in large-cap companies. International securities are generally subject to increased risks, including currency fluctuations and social, economic, and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.

Fixed-income securities are subject to loss of principal during periods of rising interest rates and are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors before investing. Interest rates and bond prices tend to move in opposite directions. When interest rates fall, bond prices typically rise, and conversely, when interest rates rise, bond prices typically fall.

The S&P 500 is a stock index considered to be representative of the U.S. stock market in general. The NASDAQ Composite Index is an unmanaged composite index of over 2,500 common equities listed on the NASDAQ stock exchange. The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly traded American companies. The Bloomberg US Aggregate Bond Index is a benchmark index composed of US securities in Treasury, Government-Related, Corporate, and Securitized sectors. All index returns exclude reinvested dividends and interest. Indices are unmanaged and cannot be invested into directly.

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