U.S. and Canadian Markets

Stocks pushed higher in May, fueled by big tech names, positive economic news, and ongoing diplomatic efforts in the Middle East.

The Nasdaq Composite, which rose 15.29 percent in April, tacked on another 8.36 percent. The Standard & Poor’s 500 Index picked up 5.15 percent, while the Dow Jones Industrial Average advanced 2.78 percent. The S&P/TSX Composite Index gained 2.37 percent.1,2

Choppy Early

Stocks rallied early in the month, notching multiple intraday and closing records amid plenty of volatility. Investors cheered falling oil prices and better-than-expected earnings results from a couple of chipmakers, which lifted the entire tech sector and led the broader averages higher.3,4

Eyes on Jobs

Better-than-expected April job growth fueled a relief rally from investors who were pleasantly surprised that the Middle East conflict had not impacted hiring.5

Despite a hotter-than-expected April inflation report, investors appeared more focused on the U.S.-China diplomatic summit. By mid-month, the S&P 500 had closed over 7,500 for the first time, while the Dow reclaimed the 50,000 level.6,7

A Strong Finish

Kevin Warsh was sworn in as the new Fed chair late in the month, which appeared to bolster investor confidence as all three major averages hit multiple record closes.8

Confidence in ongoing Middle East diplomatic efforts grew, and stocks finished the month on a nine-week winning streak—their longest since 2023—with the Dow Industrials cracking the 51,000 level for the first time.9

U.S. Sectors

Sector performance tells an interesting story about the month.10

Information Technology (+19.76 percent) was the dominant leader and the only sector to post a double-digit gain. Health Care (+2.38 percent) and Consumer Discretionary (+2.13 percent) helped support the rally.10

On the downside, Real Estate (-0.92 percent), Materials (-0.62 percent), and Communication Services (-0.70 percent) were under pressure. Industrials (-0.83 percent) and Consumer Staples (-1.66 percent) also felt some pressure.10

Elsewhere, Financials lost 1.06 percent while Utilities (-5.19 percent) and Energy (-5.63 percent) fell further.10

Canada Recap

Canada's S&P/TSX Composite Index was under a bit of pressure early in the month as geopolitical tensions and Middle East-driven inflation fears unsettled investors. Oil prices remained high, which weighed on consumer-facing sectors but helped lift energy stocks, one of the largest weightings in the index.11,12

The TSX recovered over the second half of the month, rising steadily as AI chipmakers' strong Q1 corporate reports lifted sentiment across North American markets, carrying the TSX higher. As the month came to a close, the TSX extended its gains as ongoing diplomatic efforts in the Middle East helped ease some inflation concerns.13,14

What Investors May Be Talking About in June

On June 8th, one of the world’s most influential tech companies kicks off its Worldwide Developers Conference. Hundreds of thousands will attend online, while a much smaller group will travel to Cupertino, California, to attend in person.15

Although it’s hosted by one company, the conference has become a seminal event for the industry.15

Expect artificial intelligence to be a big focus again this year. Industry watchers anticipate that some new AI concepts will be introduced, which could cause some ripples in the financial markets.15

World Markets

The MSCI EAFE Index climbed 2.60 percent, but the Index underperformed all three major U.S. market averages for the third consecutive month.16,17

In Europe, Spain (+3.27 percent), Italy (+3.71 percent), and Germany (+3.34 percent) notched solid gains. France (+0.84 percent) and the United Kingdom (0.29 percent) lagged a bit.17

Markets outside of Europe were also mixed. Mexico rose 1.08 percent, while India fell 2.78 percent. Brazil (-7.22 percent) was under pressure throughout the month.17

Japan (+11.88 percent) was a top performer in the Pacific Rim. Australia added 0.76 percent, while China’s Hang Seng index lost 2.30 percent. And for the second consecutive month, Korea (+28.45 percent) delivered a 25+ percent gain.17

Indicators

Gross Domestic Product (GDP)

The economy grew 1.6 percent on an annualized basis in the first quarter, based on the Commerce Department’s second revision of GDP, down from its initial estimate of 2.0 percent. Downward revisions to inventory investment and consumer spending drove most of the overall lower pace.18,19

Employment

Employers added 115,000 jobs in April, versus the 55,000 economists expected. Jobs grew the most in the healthcare, retail, and leisure & hospitality sectors. Unemployment held steady at 4.3 percent last month. Wage growth rose 0.2 percent month over month in April. Year-over-year wage growth increased to 3.6 percent, below expectations.20,21

Retail Sales

Consumer spending rose 0.5 percent in April as expected. Sales at furniture and health & personal-care stores contracted. Interestingly, excluding slower-than-expected sales at gas stations, retail sales rose 0.3 percent month over month. Year-over-year retail sales increased 4.9 percent in April.22,23

Industrial Production

Industrial output rose 0.7 percent in April over the prior month, rebounding from March’s upwardly revised 0.3 percent decline and exceeding expectations for a 0.2 percent increase.24

Housing

Housing starts fell by 2.8 percent in April over the prior month, beating expectations. An unexpected 14-percent rise in multifamily starts offset a 9-percent drop in single-family starts. Regionally, single-family starts rose the most in the Northeast (+16.1 percent) with modest increases in the West (+5 percent) and the Midwest (+2.5 percent), while the South (-11 percent) was the only region where starts fell.25,26

Sales of existing homes rose 0.2 percent in April over the prior month. Increased inflation expectations stemming from higher oil prices pushed mortgage rates higher, putting pressure on sales. Year over year, existing home sales rose 0.5 percent. The median existing home sales price was $417,700, 0.9 percent higher than in April 2025. The supply of unsold homes rose 5.8 percent month over month (1.4 percent year over year) in April to 4.4 months of supply at the current sales rate.27,28

Three months of new home sales data came in last month, previously delayed by government shutdowns. Homebuyers purchased 622,000 newly constructed homes in April, falling short of expectations of 663,000 new home sales. The median new home price rose to $422,500 in April, 8 percent higher than March. The 489,000 unsold new homes in April marked a still-high level of inventory, equal to 9.4 months of supply at the latest sales pace.29,30

Consumer Price Index (CPI)

Consumer prices rose 0.6 percent in April over the prior month, in line with expectations. Higher energy prices (including gasoline) drove over 40 percent of the CPI’s monthly rise. Core inflation, which excludes energy and food prices, rose 2.8 percent year over year, also a little higher than expected.31

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer jumped 7.9 percent in April, the biggest increase in almost a year. Civilian aircraft orders soared 166 percent, with China committing to purchasing 200 planes following a recent U.S.-China presidential summit. Excluding transportation, durable goods orders rose 1.3 percent.32

The Federal Reserve

While there was no Federal Open Market Committee meeting in May, the month was noteworthy for several reasons.

On Friday, May 15, Jerome Powell finished his eight-year tenure as the Chair of the Federal Reserve.

On May 20, the FOMC released minutes from its April meeting, which showed the Middle East conflict has reshaped the Fed’s outlook on interest rates.33

On Friday, May 22, incoming Fed Chair Kevin Warsh was sworn in.34

And on June 16–17, the Federal Reserve will convene its next meeting. That meeting will include a Summary of Economic Projections, including the "dot-plot" of long-term interest rate forecasts.