Stocks ended May on a high note, with the S&P 500 and Nasdaq both gaining around 2% in a shortened week that packed in several key developments. Investors were encouraged by easing inflation and solid tech earnings, helping markets notch their best monthly performance since late 2023. The Dow and Russell 2000 also posted gains, though small caps continue to lag. Despite renewed tariff concerns and political noise, market sentiment shifted more positively as investors focused on fundamentals rather than headlines.
One of the more surprising market reactions came after a federal court reinstated most of Trump’s tariffs. Normally, that kind of news would spark a sell-off. Instead, the market held steady, likely because the White House had already delayed tariffs on EU goods earlier in the week. Meanwhile, the April PCE inflation report showed signs of cooling, with headline inflation dropping to 2.2%. That data supported growing hopes for interest rate cuts later this year, and Treasury yields moved lower as a result.
June Kicks Off with a Watchful Market
After a seriously strong May, the market is heading into June with a little more hesitation. The S&P 500 just had its best May in decades, and the Nasdaq wasn’t far behind. It was the kind of rally that gave investors a breather after months of chop. But as we step into the first week of the new month, things feel different. There’s less momentum and more caution in the air. A few big headlines—like the threat of new tariffs and some key economic reports—are keeping everyone on their toes.
The Jobs Report Could Set the Tone
Friday’s jobs report is going to be a big one. Expectations are that hiring slowed in May, with around 130,000 new jobs versus 177,000 the month before. That slowdown might sound bad, but it could actually help the Fed feel more confident about cutting rates. If job growth cools off and inflation continues easing, the door opens wider for rate relief later this year. But it’s a tightrope walk. If the data looks too weak, people might start worrying about a bigger slowdown. On the flip side, if wages jump too much, it could reignite inflation fears. Either way, the market will be watching closely.
Trade Tensions Are Heating Back Up
Just when it seemed like tariff talk had quieted down, it’s back. President Trump is floating steep new tariffs—50% on European Union goods and 25% on Apple products made outside the U.S. For now, the EU tariff deadline has been pushed to July 9, so there’s a bit of a buffer. But the market doesn’t love uncertainty, and this kind of news stirs up a lot of it. If these tariffs turn into real policy, it could hit companies with global exposure and mess with supply chains all over again. It’s a reminder that even with solid earnings and improving inflation, outside risks still matter.
Bond Yields Are Sending a Message
While most people are focused on stocks, the bond market is flashing some signals of its own. The yield on the 30-year Treasury has been climbing and recently crossed above 5%. That’s not just a number—it’s a reflection of how investors are feeling about inflation, debt levels, and fiscal discipline. If yields keep rising, it could start weighing on parts of the equity market, especially high-growth names and sectors that are sensitive to borrowing costs. It’s the kind of move that doesn’t always make headlines but absolutely matters for how portfolios perform.
What to Watch This Week
This week is all about how the market digests the crosscurrents. A cooler jobs report might be the green light bulls need to keep things moving, especially if it helps confirm that the Fed is closer to cutting rates. But if trade headlines or rising bond yields start to dominate the conversation, stocks could get wobbly again. This isn’t the kind of environment that calls for big, bold bets. It’s more about staying flexible, managing risk, and being ready to react when opportunities pop up.
The market’s had a good run, but this week could be more about holding onto gains than chasing new ones. A cautious, well-informed approach is going to go a long way in a setup like this.