May turned out to be a bounce-back month for stocks after a difficult April, when all the most important indexes were down. All of the most important benchmarks were higher in May, led by the Nasdaq Composite, which jumped 6.9% to finish the month at 16,375.

The S&P 500 gained 4.8% in May, closing the month at 5,278, while the Dow Jones Industrial Average rose 2.3% in May to succeed in 38,686. The small-cap Russell 2000 jumped 4.9% to finish the month at 2,070.

Nevertheless, May ended with a whimper as stocks were down almost across the board. Let’s take a have a look at what happened and why.

Roller-coaster week

The most important large-cap indexes all fell in the ultimate week of May, nevertheless it would have been much worse without the May 31 rally.

The S&P 500 ended a five-week winning streak by falling 0.5% last week. Nevertheless, it outperformed the Dow Jones Industrial Average, which fell 1%, and the Nasdaq Composite, which dropped 1.1%.

In reality, things would have been rather a lot worse — particularly for the Dow — if not for the 570-point rally on Friday, which marked its best day of 2024 to date. The lone outlier was the Russell 2000, which was flat for the week at 2,070.

There really was no major negative catalyst to drive down stocks last week, although the 10-year Treasury yield jumped on Wednesday to surpass 4.5%, the very best level since April. In fact, when Treasury yields spike over that 4.5% threshold, stock prices often drop.

Then again, there was some good economic news. Consumer confidence rose in May for the primary time since January. Investors greeted this news with mixed reactions, as some may fear that the great economic news could delay interest-rate cuts.

Later within the week, the April reading from the Personal Consumption Expenditures index was released on Friday, and it looked as if it would perk up investors. This key inflation gauge was in keeping with economists’ projections.

Inflation rose 2.7% yr over yr in April, which was expected, but there have been some data points inside the report that were higher than anticipated. Namely, PCE minus food and energy prices was lower than the previous month, as was real PCE, which measures the costs of products and services.

The PCE data spurred the markets higher on Friday, as inflation didn’t rise, and there have been some solid indicators that it could move lower.

Hoka shoe maker amongst week’s top stocks

Overall, the first-quarter reporting period has been a robust earnings season. In keeping with FactSet, 78% of S&P 500 firms topped earnings estimates in the primary quarter, which is higher than the five-year average.

That momentum appears to be continuing within the second quarter, as analysts have increased their earnings-per-share estimates in aggregate by 0.3%. Typically, analysts reduce their EPS estimates in the combination through the first two months of 1 / 4, in response to FactSet.

The highest three stocks on the S&P 500 last week were Best Buy (NYSE:BBY), which climbed 21.8%; Deckers Outdoor (NYSE:DECK), which rose 20.9%; and Marathon Oil (NYSE:MRO), which climbed 12.4%.

Best Buy rose on earnings results that beat analysts’ estimates. While sales were down within the quarter, the corporate maintained its guidance for the upcoming quarter and full yr because it expects sales to extend.

Deckers destroyed earnings estimates, posting strong quarterly results on May 23. The footwear manufacturer, which makes the Hoka and Ugg brands, also delivered robust earnings and sales expectations for the present fiscal yr.

Marathon Oil rose on the news that it is going to acquired by ConocoPhillips (NYSE:COP).

Of the three, Deckers is the one to control, as its brands have been best in school, and its outlook is powerful.