Market Update—May 2025: Digging Beneath the Surface

Market Update—May 2025: Digging Beneath the Surface

After a strong start to the year, markets have hit a patch of turbulence. The S&P 500 Index declined for the third consecutive month in April, marking a period of heightened volatility. The Index dropped more than 11% in the first six trading days of the month before recovering to finish roughly flat—a dramatic round trip that rattled many investors.

This marks only the third time this decade the index has experienced three straight monthly declines. In the past, such periods (like early 2020 during the pandemic and fall 2023 during a recession scare) were followed by sharp rebounds. However, we don’t expect a similar surge this time around. After two years of strong returns, we believe the market is now more fairly valued.

Despite the headlines and uncertainty, we believe talk of America’s decline—economically or otherwise—is greatly exaggerated. The U.S. continues to be a global anchor for capital and innovation, and we see little evidence to suggest its position is in meaningful jeopardy.

Ten Positives to Consider

While it’s impossible to predict exactly where the market goes next, here are ten encouraging data points we believe are worth considering as we head into May:

Unemployment remains low – Currently 4.2%, reflecting a resilient job market.
Interest rates are easing – The 10-year Treasury yield recently dipped to 4.16%.
The Fed has room to maneuver – With the fed funds rate at 4.5%, there’s flexibility if the economy slows.
Inflation is under control – No rate hikes are expected in the near term.
Energy prices have moderated – Lower gas prices help consumers and businesses alike.
Corporate earnings are improving – S&P 500 earnings are forecasted to grow 9% in 2025.
No signs of a current recession – The economic slowdown many feared hasn’t materialized.
Banks are strong – Unlike 2008, the banking system is well-capitalized and stable.
Stock buybacks returning – As Q1 earnings season wraps up, more companies are resuming buybacks.
Valuations are more reasonable – The Index is down nearly 10% from February highs, improving entry points.

Our Perspective

Markets are always navigating uncertainty—it’s the nature of investing. But historically, long-term investors have been rewarded for staying the course. Timing the market is nearly impossible. What matters more is having a thoughtfully diversified portfolio that includes equities, bonds, and alternative assets tailored to your goals and risk tolerance.

We’re here to guide you through the ups and downs and ensure your plan is designed to endure and adapt. As always, we welcome your questions and conversations.

Posted in As the Ticker Turns

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