Date Published: May 13, 2025
After a turbulent start to 2025, US equity markets rebounded impressively in May. The S&P 500 erased year-to-date losses, closing up 0.7% after inflation data showed prices fell to an annual rate of 2.3%, below forecasts.
The rebound followed President Trump’s decision to pause new “reciprocal” tariffs for 90 days, boosting sentiment and demand for US stocks after April’s sharp selloff.
At its worst, the S&P 500 had lost 15% amid fears over the economic fallout of aggressive trade policies. Upon news of the tariff delay and improved inflation, the index surged—up 9.5% on April 9—and sustained gains throughout May, culminating in the strongest monthly performance since 1990.
Treasuries and the dollar remained stable, while shorter-term bonds outperformed.
Despite these gains, consumer confidence stayed subdued and questions lingered about long-term growth prospects, with many investors watching for further diplomatic progress and concrete improvement in economic fundamentals.
The month marked an important psychological recovery for both Wall Street and Main Street but underscored the precarious balance between policy-driven volatility and macroeconomic resilience.