The three most widely followed U.S. indexes — the Nasdaq Composite, the Dow Jones Industrial Average, and the S&P 500 — increased 3.27%, 2.91%, and 2.45%, respectively, last week. Investors showed cautious optimism, following a notable de-escalation in the Middle East conflict, specifically related to the Israel-Iran situation, after President Donald Trump announced a ceasefire agreement. Also, the expectation of the Federal Reserve's interest rate cut and ongoing discussions around trade policies with major trading partners have played a role.
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The Department of Commerce reported that personal consumption expenditure (PCE), the Fed’s preferred inflation index, gained 0.1% in May, in line with street expectations. On a year-over-year basis, PCE rose to 2.3% in May from 2.2% last month. Favorable inflation conditions, along with a shrinking labor market, raise hope for interest rate cuts by the Fed in the near future. However, Fed Chair Jerome Powell reiterated the central bank’s “wait and see” approach and warned against rising inflation, particularly due to high tariffs.
The U.S. economy contracted deeper than initially estimated in the first quarter of 2025. The Gross Domestic Product (GDP) contracted by 0.5% against the previous estimate of 0.2%, the first negative GDP reading since Q1 of 2022. The consumer confidence also fell to 93 in June, sharply down from May’s reading of 98. Personal income, personal spending and personal savings fell by 0.4%, 0.1%, and 4.5%, respectively, in the same period.
Regardless of market conditions, we, here at Zacks, provide investors with unbiased guidance on how to beat the market.
As usual, Zacks Research guided investors over the past three months with its time-tested methodologies. Given the prevailing market uncertainty, you may want to look at our feats to prepare better for your next action.
Here are some of our key achievements:
Shares of Banco Bradesco S.A. BBD have gained 30% (versus the S&P 500’s 14.8% increase) since it was upgraded to a Zacks Rank #2 (Buy) on April 24.
Another stock, Ubiquiti Inc. UI, which was upgraded to a Zacks Rank #2 on April 25, has returned 28.7% (versus the S&P 500’s 12.4% increase) since then.
Zacks Rank #1 (Strong Buy) stocks returned +6.51% in May 2025, which compares to +4.47% for the S&P 500 index and +4.12% for the equal-weight version of the index. This follows the Zacks Rank # 1 stocks’ +17.96% return in April vs. +15.04% for the S&P 500 index.
