MONTHLY ECONOMIC REVIEW : JUNE 2025
In this month’s recap: S&P 500 SURGES, TRADE & INFLATION RELAXATION
Presented by The PensionmarkMeridien Team, June 2025
MARKET RECAP
Last month brought us surging stocks fueled in part by progress on trade with the United Kingdom and China and inflation metrics released during the month following a similar relaxing pattern as the previous month.
It has been a volatile two months, with swings in both directions, making it an opportune time to share an overview of what happened and what could be ahead
MAJOR U.S. STOCK INDEXES
It was bulls on parade during May on Wall Street, courtesy of tariff relief hopes. The S&P 500 had its best month of May in 30 years.
Here’s how major U.S. stock indexes fared in May:
- The S&P 500 rose by 6.15%1.
- The Nasdaq 100 surged by 9.04%2.
- The Dow Jones Industrial Average traded higher by 3.94%3.
INFLATION RELAXATION
Inflation metrics continued to show signs of easing in May, much like in April, even as many consumers braced for potential increases tied to new tariffs.
Consumer Price Index (CPI)
Despite consumer expectations for rising inflation, the data suggested continued softening. In April, the Consumer Price Index (CPI) rose just 0.2% month-over-month, bringing the annual inflation rate to 2.3%. This was lower than expected and marked the slowest pace since February 2021.
As has been the case in previous months, shelter costs were the biggest contributor, with a 0.3% increase accounting for more than half of the CPI’s overall rise. Meanwhile, wholesale prices—as tracked by the Producer Price Index (PPI)—also saw relief, slipping to 2.4% from 2.5% the month prior.
Core PCE
The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) index, was released toward the end of May and offered the most up-to-date snapshot of inflation. It revealed a softening to 2.6% in April, in line with expectations. Altogether, the data released throughout May pointed to a continuation of April’s cooling inflation narrative. Still, the longer-term effects of tariffs remain uncertain. Last month brought volatile markets early in April, yet it also presented moderating inflation metrics and a strong finish for large-cap technology stocks. With all of these developments in mind, now feels like a good time to share an overview of what happened and what could be ahead.
-QUOTE OF THE WEEK-
“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”
— Suze Orman
FED MEETING
At its May meeting, the Federal Reserve kept its key overnight lending rate unchanged4 at 4.25% to 4.50%, as expected. The tone from the Fed remained cautious, reflecting a mixed bag of economic indicators. Notably, the Fed explicitly ruled out any preemptive rate cuts in response to tariffs. Chair Jerome Powell reiterated the Fed’s “wait and see” stance, emphasizing the importance of patience in navigating the current environment.
LABOR MARKET
Labor data for April showed strength, with 177,000 jobs added5 on a seasonally adjusted basis—well above the Dow Jones estimate of 133,000. This was particularly noteworthy given concerns about the economic impact of recent blanket tariffs. Markets responded positively to the news. The unemployment rate held steady at 4.2%, underscoring a stable labor market, while average hourly earnings grew by 0.2%, just under the 0.3% forecast.
To read what we had to say in our Mays Economic Recap
THE CONSUMER: PENSIVE, WAITING
Consumer sentiment remained near historic lows in May, according to the University of Michigan. The uncertainty surrounding trade policy continues to weigh heavily on consumer confidence. After a strong surge in March retail sales—driven by consumers rushing to buy before potential price hikes—April’s numbers moderated significantly. Retail sales rose just 0.1%6 for the month, although March’s figure was revised upward to an impressive 1.7%.
APRIL SHOWERS GAVE US MAY FLOWERS
After a turbulent April in the financial markets, May brought a more optimistic tone. Concerns about trade and tariffs began to ease, replaced by signs of progress. Earnings season also played a role in lifting sentiment, with Q1 results showing strength. Notably, NVIDIA closed out the month by beating revenue expectations, providing a boost to investor confidence. As we begin a new month, there’s reason to feel cautiously optimistic—but if 2025 has taught us anything, it’s that market narratives can change quickly. Still, May’s shift in sentiment is a strong reminder of the discipline required to stay focused on long-term investment goals.
If you’d like to discuss the current market outlook or review investment strategies aligned with your objectives, please don’t hesitate to reach out.
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