High-yield dividend stocks face declines in 2025.
At GLHR Investing, we’re dissecting the stock market’s performance in the first 12 days of May 2025 to see how it stacks up against May 2024 and whether now is a smart time to buy. With Trump’s tariffs shaking global trade, inflation at 3%, and the S&P 500 (SPY) down 4.8% year-to-date, volatility is high, and a 60% recession risk looms. Are stocks a bargain, or should you hold off? Here’s a detailed comparison of May 1–12, 2025, versus May 1–12, 2024, with insights on whether to invest now.
- Stock Market Performance: May 1–12, 2025:
- S&P 500 (SPY):
- Price Movement: SPY started May 1 at ~$518.40 (based on April 30 close of $518.39, adjusted for dividends) and closed May 9 at $513.88, down 0.87% over the first 12 days, per real-time data. Intraday volatility saw SPY dip to ~$508.55 on May 6, with a peak of ~$520 on May 7, reflecting tariff and earnings reactions.
- Key Drivers: A fragile V-shaped recovery followed April’s tariff-driven crash (SPY fell 6% April 3–4). Positive trade developments (e.g., U.S.-UK trade framework announced May 8) and Fed bond purchases lifted SPY 1% from May 6–9, per X posts. However, ongoing tariff probes (semiconductors, minerals) and China’s 84% retaliatory tariffs capped gains.
- Sector Performance: Utilities (SPLRCU) and consumer staples (SPLRCS) gained ~1–2%, driven by defensive demand. Tech (SPLRCT) lagged, down ~2%, hit by chip supply fears. Gold surged 3% to $3,300/ounce as a safe haven.
- Volatility: The VIX averaged ~35, down from April’s 40.86 peak but signaling persistent fear. SPY’s 0.87% drop aligns with May’s historical “decent” performance (small positive returns over 2015–2024), per Trade That Swing.
- Other Indices:
- Nasdaq 100 (QQQ): Down ~1.5%, underperforming SPY due to tech exposure (e.g., NVIDIA -3%). Posts on X note a 10% YTD drop, reflecting tariff volatility.
- Russell 2000 (IWM): Down ~2%, with a 19% YTD decline, as small-caps remain in bear territory (28% peak drawdown), per X post @awealthofcs.
- Dow Jones: Down 0.23% to 41,274.75 on May 9, per X post @TheBluntEastern, showing resilience in blue-chip stocks.
- Market Sentiment: X posts highlight a “mixed” market, with SPY up 1% week-on-week (May 6–9) but down 3.8% YTD, per @grok. Optimism from trade talks and Fed support contrasts with tariff and inflation fears (2.3% CPI), per @MemeDevs.
- S&P 500 (SPY):
- Stock Market Performance: May 1–12, 2024:
- S&P 500 (SPY):
- Price Movement: SPY started May 1, 2024, at ~$501.98 (based on April 30 close) and rose to ~$518.12 by May 10, a 3.2% gain over the first 12 days, per historical data. May 2024 saw steady gains, with SPY up 4.2% for the full month, driven by strong Q1 earnings and easing inflation (3.4% CPI), per Forbes.
- Key Drivers: Robust corporate earnings (9% S&P 500 growth expected for 2024) and optimism for Fed rate cuts (anticipated for late 2024) fueled bullish momentum. Consumer sentiment was stronger (67.4 vs. 50.8 in 2025), supporting spending, per University of Michigan data.
- Sector Performance: Tech (SPLRCT) led with ~5% gains, driven by AI optimism (e.g., NVIDIA, Apple). Consumer discretionary (SPLRCD) rose ~3%, reflecting healthy retail spending. Defensive sectors (utilities, staples) lagged, up ~1%.
- Volatility: The VIX averaged ~15, indicating low fear compared to 2025’s 35. May 2024 was a “best month” historically (2015–2024), with positive returns 57% of the time, per Trade That Swing.
- Other Indices:
- Nasdaq 100 (QQQ): Up ~4%, outperforming SPY due to tech strength (e.g., Magnificent 7). QQQ’s 14.7% annualized return (2005–2024) supported gains, per Trade That Swing.
- Russell 2000 (IWM): Up ~2%, reflecting small-cap recovery, less pronounced than large-caps.
- Dow Jones: Up ~2.5%, driven by stable blue-chip performance, per historical trends.
- Market Sentiment: May 2024 was marked by bullishness, with the S&P 500 gaining 4.2% for the month, supported by a “Goldilocks” economy (2.8% GDP growth, 3.4% inflation), per Fidelity. No major tariff or trade war concerns existed, unlike 2025.
- S&P 500 (SPY):
- Comparison: May 1–12, 2025 vs. May 1–12, 2024:
- Performance:
- 2025: SPY down 0.87%, reflecting tariff volatility and recession fears. The market’s fragile recovery (1% weekly gain May 6–9) contrasts with April’s 4.3% drop, per real-time data.
- 2024: SPY up 3.2%, driven by earnings optimism and stable economic growth (2.8% GDP). May 2024’s bullish trend far outpaced 2025’s cautious consolidation.
- Key Difference: 2025’s -0.87% vs. 2024’s +3.2% shows a 4.07% performance gap, driven by tariff uncertainty (25% Canada/Mexico, 125% China) and weaker sentiment (50.8 vs. 67.4).
- Volatility:
- 2025: VIX ~35, with SPY’s intraday swings (e.g., $508.55–$520) reflecting trade policy whiplash (April 8 tariff pause, May 8 UK deal). X posts note a “mixed” market with high fear.
- 2024: VIX ~15, indicating calm. SPY’s steady climb had minimal pullbacks, supported by low inflation (3.4%) and Fed cut expectations.
- Sector Trends:
- Economic Context:
- Sentiment: X posts in 2025 highlight a “V-shaped recovery” but warn of tariff risks (@sallore102), while 2024 lacked such concerns, with steady bullishness.
- Performance:
- Is It a Good Time to Buy Stocks?:
- Reasons to Buy Now:
- Valuation Discounts: SPY trades at an 8% discount to fair value (April 30, per Morningstar), down from a premium in January 2025. Value stocks (12% discount) and core stocks (11% discount) offer entry points, per Morningstar’s tactical overweight recommendation.
- Historical Patterns: May is a “decent” month for SPY (positive 57% of 2015–2024), with small gains, per Trade That Swing. Early-month buying (first five days) yields +0.084% daily returns, vs. +0.019% later, per Investopedia.
- Trade Deal Optimism: The U.S.-UK trade framework (May 8) and ongoing talks with Canada/Japan could ease tariffs, lifting SPY 3–5% if deals materialize, per Schwab. X posts note a 1% SPY gain from May 6–9 tied to trade hopes.
- Earnings Strength: Q1 2025 earnings are expected to grow 8.1% (S&P 500), with consumer staples and utilities beating estimates, per Fidelity. Strong performers (e.g., Walmart, NRG Energy) report May 12–15, potentially boosting sentiment.
- Reasons to Wait:
- Tariff Uncertainty: The 90-day tariff pause ends July 7, and new probes could raise costs, per Schwab. A failure to secure trade deals may trigger a 5–10% SPY drop, per Morningstar’s volatility warning.
- Recession Risks: A 60% recession probability and -0.3% Q1 GDP growth signal slowdown, per J.P. Morgan and Atlanta Fed. Consumer spending cuts (13%) and weak sentiment (50.8) threaten demand, per U.S. Bank.
- Inflation and Rates: Inflation expectations (6.7%) and no Fed rate cuts (4.25–4.5%) raise borrowing costs, per CME FedWatch. Powell’s May 7 comments warned of 4% inflation, capping growth stock upside, per Schwab.
- Market Volatility: SPY’s 15.6% YTD drop and proximity to bear market territory (17.6% from February peak) suggest further downside, especially for tech, per U.S. Bank. X posts warn of a 7.2% Nasdaq YTD drop.
- Consumer Sentiment on X:
- Optimistic posts (@sallore102) highlight SPY’s recovery above April lows, driven by trade exemptions ($102 billion Chinese imports), but caution persists (@MemeDevs) due to tariffs and 2.3% inflation.
- @awealthofcs notes SPY’s -9% drawdown (from -19% low), suggesting a buying opportunity but warning of small-cap weakness (Russell 2000 -19%).
- These posts are inconclusive but reflect cautious optimism tempered by tariff risks, aligning with web data.
- Reasons to Buy Now:
- Comparison Summary:
- May 1–12, 2025: SPY -0.87%, volatile with tariff-driven dips and trade-deal rallies. Defensive sectors and gold lead, tech lags. High VIX (~35) and recession fears (60%) create caution.
- May 1–12, 2024: SPY +3.2%, steady bullishness from earnings and Fed cut hopes. Tech and discretionary shone, with low VIX (~15) and stable growth (2.8% GDP).
- Key Takeaway: 2025’s -0.87% lags 2024’s +3.2% by 4.07%, driven by tariffs, inflation fears, and weaker GDP (-0.3% vs. 2.8%). 2025’s volatility contrasts with 2024’s calm, making buying riskier now.
- Is It a Good Time to Buy Stocks?:
- Verdict: It’s a cautious buying opportunity for selective, defensive stocks, but not a broad market buy. SPY’s 8% discount and May’s historical strength suggest potential, but tariff uncertainty and recession risks demand prudence.
- Recommendations:
- Buy Selectively: Focus on value and core stocks (e.g., Walmart, AT&T, utilities) trading at 12–11% discounts, per Morningstar. ETFs like XLU (utilities) or XLP (staples) offer stability, up 1–2% in May. Gold ETFs (GLD) hedge inflation, up 3%.
- Timing: Buy early in the month (May 12–15) for stronger returns (+0.084% daily), per Investopedia. Target dips (e.g., SPY near $500) for better entry points.
- Avoid Risky Bets: Steer clear of tech (SPLRCT, down 2%) and import-heavy retail (e.g., Nike, Amazon), vulnerable to tariff costs (25–125%), per Schwab.
- Portfolio Strategy: Allocate 5–10% to defensive ETFs, hedging with 3–5% in gold (GLD) or bonds (TLT) against volatility. Dollar-cost average to mitigate risks, per Morningstar.
- Monitor Catalysts: Watch Q1 earnings (May 12–15, e.g., Walmart, Cisco), trade talks (Canada, Japan), and the Fed’s June 17–18 meeting. A trade deal or strong earnings could lift SPY 3–5%; tariff escalations may push it to $500, per Schwab.
- Risks:
- Tariff reinstatement or new levies (e.g., minerals probe) could trigger a 5–10% SPY drop, per Morningstar.
- Weak consumer spending (down 13%) and rising unemployment fears (44% chance, New York Fed) may dent earnings, per U.S. Bank.
- High valuations in growth stocks (3% premium, per Morningstar) risk pullbacks if inflation hits 4%, per Powell’s warnings.
- Why It Matters: The first 12 days of May 2025 (SPY -0.87%) pale compared to May 2024’s bullish +3.2%, reflecting tariffs, recession fears, and weaker GDP. While SPY’s 8% discount and trade deal hopes offer selective buying opportunities, volatility (VIX ~35) and economic risks suggest caution. At GLHR Investing, we recommend defensive picks like utilities and gold, paired with strategic timing, to navigate this choppy market and build wealth prudently.
Stay strategic with GLHR Investing—let’s seize the right opportunities!
Disclaimer: GLHR Investing is not a financial adviser; please consult one.
