U.S. equity indices were essentially flat for the month of May, as the S&P 500 and the Dow Jones Industrial Average both were up moderately for May. Analysts are starting to question earnings growth and profitability among some sectors as the term “profits recession” has been widely used. In addition to fundamental concerns such as earnings, other issues with behavioral, tightening credit conditions, and the election in the fall are leading to greater uncertainty.
Many analysts believe that the beginning of the year turmoil that followed the Fed’s rate hike in December may not be replicated, as the equity markets may have already priced in a rate increase.
Energy sector earnings have hindered equity indices for months as profits dropped, but are expected to rebound as oil prices have risen.
Sources: Bloomberg, S&P, Dow Jones, Federal Reserve