Equities Post Strong Returns in May

Despite inflation worries, fiscal deficit concerns, and continued geopolitical conflict, equity markets posted strong returns in May on the back of easing tariff tensions, lower probability of recession, and better than expected US Q1 earnings. Technology led the rebound as the Nasdaq Composite Index gained 9.7%, while the S&P 500 Index was up 6.3%, both posting their best monthly gains since November 2023. Following US growth and US large-caps, US mid-caps rose 5.5% while international developed equities also increased 5.2%. Aside from high yield credits (+1.8%) and investment grade corporates (+0.3%), bonds were mostly down as 7-10 year US Treasuries and the US Aggregate Bond Index both fell (-1.2% and -0.7%, respectively). Commodities produced mixed returns, with both crude oil and silver posting gains (+5.7% and +1.4%, respectively) while broad-based commodities and gold were down (-0.3% and -0.1%, respectively).