The month of May was plagued by a sideways market with positive momentum quickly being counteracted by negative data. Poor economic news and falling oil prices dragged on equities at the start of the month.
An improving U.S. employment situation, potentially higher wage growth and rising inflationary outlook helped support a rebound. Moreover, stronger-than-expected retail sales and improving consumer sentiment also bolstered stocks.
Nevertheless, trading remained defensive as conservative investors stuck to Treasuries and other hedge plays.
In mid-May, the Federal Open Meeting Committee minutes revealed a hawkish stance where policy makers pointed to rising economic strength as the main factor for an increased chance of a June rate hike.
U.S. equities continued to strengthen toward the end of May on improving economic data, such as rising home prices and a strengthening housing market.
Markets, though, ended the month on a sour note as traders refocused on Federal Chair Janet Yellen’s remarks on a possibile June rate hike given the strength in the labor market.
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