Covering May Market
Despite some volatility at times, stocks posted strong gains in May. As a result, the S&P 500 Index ended the month roughly flat for 2025 — a remarkable performance — given that the index was close to “bear market” territory in the first half of April.
The best-performing sector for the month was Technology, which benefitted from renewed interest in artificial intelligence (AI). Healthcare, which came under pressure from a US executive order to lower drug prices, was the worst performer.
Investors remained highly focused on Donald Trump's tariffs throughout May.
Here, developments gave investors reasons to be optimistic about the future. First, the US signed a historic trade deal with the UK, giving American companies unprecedented access to the UK markets. Then, the US made a temporary deal with China to reduce tariffs (which saw China lift a month-long ban on Boeing deliveries), effectively easing the trade war between the two countries. However, it’s worth noting that it wasn’t all good news on the tariff front. In late May, Trump spooked the market with talk of a 50% tariff on European goods (which was later delayed until July 9) as well as talk about a tariff of at least 25% on Apple and Samsung if the companies do not start manufacturing products in the US. Overall though, the tariff landscape was more favourable for investors.
Another dominant theme in May was AI.
One notable development here was Saudi Arabia’s announcement of a massive AI superstructure project. This will see HUMAIN, a subsidiary of the Saudi Public Investment Fund (PIF), buy billions worth of AI chips from Nvidia and AMD. Speaking of Nvidia, the company posted its earnings for the quarter ended April 30 and they were exceptional, thanks to the demand for its AI chips. For the quarter, revenue was up 69% year-on-year to $44.1 billion while earnings per share were up 33%. Another event that made headlines was Google’s I/O day. At this event, the tech company told investors that a new “AI Mode” feature for Google Search would be rolled out for users in the US. Google also unveiled a new AI shopping feature as well as a number of wearable AI products such as headsets and smartglasses. Not wanting to be outdone, Big Tech rival Meta Platforms told investors at its annual shareholder meeting that Meta AI now has 1 billion monthly active users. Other AI developments included an announcement by Oracle to buy $40 billion of Nvidia chips for OpenAI's new US data centre, talk of a new AI device linked to ChatGPT (created by ex-Apple designer Jony Ive), and strong earnings from companies offering AI solutions such as Snowflake and Salesforce.
Elsewhere in the technology space, self-driving vehicles were in the spotlight.
In an interview with CNBC, Tesla CEO Elon Musk said that the company will start testing its robotaxis in Austin, Texas by the end of June and that it could have up to a million of these autonomous vehicles on the road by the end of 2026. Of course, Alphabet’s Waymo already has autonomous cars on the road today, so it is well ahead of Tesla at present. The company told investors during the month that it has now completed 10 million autonomous taxi trips — twice the amount completed five months ago.
Cybersecurity was also in focus due to a number of high-profile cyberattacks, especially in the UK where retailers Marks & Spencer and Harrods were hit by ransomware. As a result of these attacks, a number of cybersecurity stocks including CrowdStrike and Zscaler delivered strong gains.
On the economic front there was plenty of news for investors to digest.
At its meeting in early May, the US Federal Reserve kept rates unchanged, preferring to take a wait-and-see approach to monetary policy. The Bank of England, however, cut rates by 0.25% to 4.25% at its May meeting in an effort to support economic growth (the British pound hit its highest level against the US dollar since 2022 in May). In the US, House Republicans narrowly passed a sweeping tax and spending bill (known as the “Big, Beautiful Bill”). While this could potentially boost economic growth, it has raised concerns about inflation and the country’s budget deficit.
It’s worth pointing out that during May, US government debt was downgraded by ratings agency Moody's. Other key US developments included economic deals with Saudi Arabia, Qatar, and the UAE, which were secured after Donald Trump travelled to the Middle East.
In the shipping space, the cost of transporting goods soared as importers rushed to ship Chinese goods to the US before the pause in tariffs expired. As for bond yields, US 10-year treasury yields surpassed 4.6% during the month, while 30-year treasury yields passed 5.10%, a level last seen in 2023.
Turning to commodities, gold traded sideways, ending the period near $3,300 an ounce. It has had an exceptional run over the last year — gaining about 25% — but now appears to be taking a breather. Oil — which has declined substantially this year — posted small gains, despite a dip early in the month. It started May on the back foot after Saudi Arabia signalled that it would produce more oil and expand its market share in late April.
Finally, crypto had a very strong month with Bitcoin hitting new all-time highs of around $112,000. It ended the month near $105,000 — up about 11%. A key driver here was ETF inflows, which hit record levels. Ethereum also performed well, rising about 40%.
