MARKETS:
- May experienced a strong recovery in the U.S., after tariff tensions eased and large corporation earnings were better than expected. The global equity index (MSCI ACWI IMI) was positive at +5.75% in May and was up +5.32% The S&P 500, which tracks large cap U.S. stocks, increased +6.29% in May and was up +1.06% YTD. The Russell 2000 Index, which tracks domestic small cap stocks, increased +5.34% in May and was down -6.85% YTD. The international developed equity index (MSCI EAFE) increased +4.58% in May and was up +16.87% YTD. The emerging markets index (MSCI EM) increased +4.27% in May and was up +8.73% YTD.
- In May, bond yields varied across maturities. The 30-year U.S. Treasury bond yield increased +26 bps to 4.92%; the 10-year yield increased +24 bps to 4.41%; and the 2-year yield decreased –29 bps to 3.89%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -0.72% in May and was up +2.45%
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the first quarter of 2025 decreased -0.2%, according to the “2nd” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2024 GDP increased +2.4%.
- The May Services PMI decreased to 49.90% from 51.40% in April. This represents contraction and is below market expectations of 52.00%. The May Manufacturing PMI decreased to 48.50% from 48.70% in April.
- May non-farm employment increased by 139,000 jobs, and the unemployment rate was unchanged at 4.2%, as reported by the Bureau of Labor Statistics on June 6. In May, employment increased in health care, leisure and hospitality, and social assistance. Average Hourly Earnings (wages) increased +3.9% year-over-year in May.
PERFORMANCE UPDATES
- The Total Equity Fund increased +5.67% in May and was up +4.15% YTD. The International Equity Fund increased +4.91% in May and was up +13.96% YTD. The Small Cap Equity Fund increased +5.92% in May and was down -6.86% YTD. The Fixed Income Fund decreased -0.58% in May and was up +2.26% YTD.
- Equity managers’ performance was solid in the month, with PGIM Quant U.S. Large Cap and BFF, Westfield, Channing, LSV and RBC outperforming, while all other managers underperformed.
- The UCF Balanced Fund returned +3.16% in May and was up +3.34% YTD. The Alternatives Balanced Fund increased +2.65% in May and was up +2.28% YTD. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning +3.69% in May, and was up +4.02% YTD.