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As the month draws to a close, Wall Street as well as global markets appear ready to rally. The positive shift is primarily fueled by an agreement on the debt ceiling and encouraging Q1 results, falling inflation and an AI frenzy.
Wall Street delivered a muted performance in the month, which was busy in negotiating the debt deal. The S&P 500 (up 0.9%), the Dow Jones (down 2.9%), the Nasdaq (up 6.1%) and the Russell 2000 (up 0.2%) swung in the range of negative 2.9% to up 6.1% (as of May 26, 2023). Only the Nasdaq recorded the fifth straight week of gains helped by an AI-powered tech rally.
Notably, Information Technology takes about 27.64% of the S&P 500 while the sector occupies about 60% of the Nasdaq-100. Hence, a tech rally played an instrumental role in driving the markets in May.
Let’s find out the headlines.
U.S. Debt Deal Done
After month-long negotiation, President Joe Biden and House Speaker Kevin McCarthy last week reached a tentative agreement that aims to lift the nation's borrowing limit for two years, preventing a possible U.S. default. This deal gives much-needed relief to politicians and markets, removing the threat of economic upheaval that looms every time the debt ceiling needs to be renegotiated. However, the duo must now navigate the deal into law before June 5, the date when Treasury Secretary Janet Yellen warns the government could exhaust its resources.
FAANG Is Back, So Are Chip Stocks
FAANG stocks have been on a rallying mode. Netflix (NFLX), Apple (AAPL), Alphabet (GOOGL), Meta (META), Microsoft (MSFT) and Nvidia (NVDA) stock all finished at their highest levels in at least a year. The strength of AI, corporate restructuring through layoffs, a moderation in interest rates and cooling inflation are helping FAANG stocks to bounce back after a struggling 2022.
Most recently, blockbuster first-quarter fiscal 2024 earnings from Nvidia (NVDA) led to bullishness across the AI space and chip sector, fueling a rally in stocks. Vaneck Semiconductor ETF (SMH - Free Report) added 22.4% past month (read: Tech ETFs Burning Hot on AI-Fueled Nvidia Surge).
Healthy Consumer in America
In the face of ambiguity, American consumers are demonstrating tenacity, a trend visible in Walmart's sturdy quarterly performance. U.S. Personal Saving Rate is at 4.10% compared to 4.50% last month and 3.60% last year. Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) too topped the S&P 500 and gained 5.8%.
Japan Stocks Sored: More Rally Seems in the Cards
Japan's Nikkei benchmark index has rallied to its highest point since July 1990. Several key factors have been fueling this stock rally. A strong earnings season, views that the Bank of Japan will maintain its stimulus longer, cheaper valuation, Warren Buffett’s inclination toward Japan Investing, and the economy showing signs of a post-COVID consumption rebound all underpin the optimism.
In May, winning Japan ETFs were Xtrackers MSCI Japan Hedged Equity ETF (DBJP - Free Report) , iShares Currency Hedged MSCI Japan ETF (HEWJ - Free Report) , Franklin FTSE Japan Hedged ETF (FLJH - Free Report) and WisdomTree Japan Hedged Equity Fund (DXJ). These ETFs have gained in the range of 4.8% to 5.5%.
Electrifying Opportunities in EV ETFs
The return of appeal for the big tech names has pushed Tesla's (TSLA) stock higher lately, fueling a superb rally in VCAR. Not only this, Ford Motor (F) announced in the month that it has entered into a ground-breaking agreement with Tesla, allowing Ford to access more than 12,000 Tesla V3 superchargers in North America, in 2024. Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) thus gained more than 20% past month.
Brazil Small-Caps Soar
Brazil’s Ibovespa stock index rose to the highest level in nearly four months thanks to the views that the lower inflation and progress on the new fiscal framework in Congress could lead to a reduction in the Selic rate earlier. Finance Minister Fernando Haddad stated that Brazil is on the verge of entering a cycle of interest rate cuts, highlighting that inflation is within the range and the exchange rate is stable, per tradingeconomics. Vaneck Brazil Smallcap ETF (BRF - Free Report) jumped 21.2% in the month.
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Top ETF Stories of May
As the month draws to a close, Wall Street as well as global markets appear ready to rally. The positive shift is primarily fueled by an agreement on the debt ceiling and encouraging Q1 results, falling inflation and an AI frenzy.
Wall Street delivered a muted performance in the month, which was busy in negotiating the debt deal. The S&P 500 (up 0.9%), the Dow Jones (down 2.9%), the Nasdaq (up 6.1%) and the Russell 2000 (up 0.2%) swung in the range of negative 2.9% to up 6.1% (as of May 26, 2023). Only the Nasdaq recorded the fifth straight week of gains helped by an AI-powered tech rally.
Notably, Information Technology takes about 27.64% of the S&P 500 while the sector occupies about 60% of the Nasdaq-100. Hence, a tech rally played an instrumental role in driving the markets in May.
Let’s find out the headlines.
U.S. Debt Deal Done
After month-long negotiation, President Joe Biden and House Speaker Kevin McCarthy last week reached a tentative agreement that aims to lift the nation's borrowing limit for two years, preventing a possible U.S. default. This deal gives much-needed relief to politicians and markets, removing the threat of economic upheaval that looms every time the debt ceiling needs to be renegotiated. However, the duo must now navigate the deal into law before June 5, the date when Treasury Secretary Janet Yellen warns the government could exhaust its resources.
FAANG Is Back, So Are Chip Stocks
FAANG stocks have been on a rallying mode. Netflix (NFLX), Apple (AAPL), Alphabet (GOOGL), Meta (META), Microsoft (MSFT) and Nvidia (NVDA) stock all finished at their highest levels in at least a year. The strength of AI, corporate restructuring through layoffs, a moderation in interest rates and cooling inflation are helping FAANG stocks to bounce back after a struggling 2022.
Most recently, blockbuster first-quarter fiscal 2024 earnings from Nvidia (NVDA) led to bullishness across the AI space and chip sector, fueling a rally in stocks. Vaneck Semiconductor ETF (SMH - Free Report) added 22.4% past month (read: Tech ETFs Burning Hot on AI-Fueled Nvidia Surge).
Healthy Consumer in America
In the face of ambiguity, American consumers are demonstrating tenacity, a trend visible in Walmart's sturdy quarterly performance. U.S. Personal Saving Rate is at 4.10% compared to 4.50% last month and 3.60% last year. Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) too topped the S&P 500 and gained 5.8%.
Japan Stocks Sored: More Rally Seems in the Cards
Japan's Nikkei benchmark index has rallied to its highest point since July 1990. Several key factors have been fueling this stock rally. A strong earnings season, views that the Bank of Japan will maintain its stimulus longer, cheaper valuation, Warren Buffett’s inclination toward Japan Investing, and the economy showing signs of a post-COVID consumption rebound all underpin the optimism.
In May, winning Japan ETFs were Xtrackers MSCI Japan Hedged Equity ETF (DBJP - Free Report) , iShares Currency Hedged MSCI Japan ETF (HEWJ - Free Report) , Franklin FTSE Japan Hedged ETF (FLJH - Free Report) and WisdomTree Japan Hedged Equity Fund (DXJ). These ETFs have gained in the range of 4.8% to 5.5%.
Electrifying Opportunities in EV ETFs
The return of appeal for the big tech names has pushed Tesla's (TSLA) stock higher lately, fueling a superb rally in VCAR. Not only this, Ford Motor (F) announced in the month that it has entered into a ground-breaking agreement with Tesla, allowing Ford to access more than 12,000 Tesla V3 superchargers in North America, in 2024. Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report) thus gained more than 20% past month.
Brazil Small-Caps Soar
Brazil’s Ibovespa stock index rose to the highest level in nearly four months thanks to the views that the lower inflation and progress on the new fiscal framework in Congress could lead to a reduction in the Selic rate earlier. Finance Minister Fernando Haddad stated that Brazil is on the verge of entering a cycle of interest rate cuts, highlighting that inflation is within the range and the exchange rate is stable, per tradingeconomics. Vaneck Brazil Smallcap ETF (BRF - Free Report) jumped 21.2% in the month.