With businesses across the U.S. beginning to reopen their doors, the stock market continued to rally in May, ending the month up more than 35% from its low for the year. The S&P 500® closed May at 3,044.31, which was 36.06% above its March 23 closing level of 2,237.40.
For the month, the S&P 500 was up 4.53% – and up 10.62% over the past 12 months.
The strong market gains have come amidst rising optimism that the country is headed for a strong economic recovery. Since early March, the COVID-19 pandemic has cost the lives of more than 100,000 U.S. residents and forced about 40 million U.S. workers to file for unemployment. With gross domestic product dropping 4.8% in the 1st quarter, and a further drop expected in the 2nd quarter, the economy is considered to be in a recession.
In the final weekend of May, human rights demonstrations erupted in dozens of cities throughout the U.S. and across Europe, leading to thousands of arrests and billions of dollars in losses from property damage and looting. Undaunted, the markets reopened on a positive note on Monday, June 1, with the S&P 500 posting gains the first two days of the month.
In addition to the growing hopes for an economic rebound, a catalyst for the strong market performance has been the unprecedented action of Congress and the Federal Reserve (Fed) to inject trillions of dollars into the economy to help keep businesses afloat and provide emergency income for laid-off workers.
Oil prices also rallied from extreme lows in May, as OPEC countries cut production and motorists began to return to the road, raising expectations that the steep imbalance between oil supply and global demand would begin to diminish.