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Some common headlines in May, generally revolve around the "sell in May, and go away' slogan and the unofficial start of summer holidays. This year, things could not be farther from that saying. The S&P 500 in the US was up over 6% for the month bringing 2026 gains to 10.77%. The NASDAQ was up over 9% for May, leaving it up over 16% to date in 2026. In Toronto, the TSX was up 3.9% for May, and up 9.14% so far this year.
There was a lot of news reported in the month of May, which helped to boost the broad markets. Earnings from most of the S&P 500 have been mainly inline or above expectations so far in second quarter announcements. The other aspect of promise in the markets is that the full breadth of the markets is boosting the indexes higher and not just the biggest mega cap stocks, as was the case for most of the past few years.
In Canada, we have had some major news announcements in the past 2 weeks. The federal government has announced approval for pipelines in Alberta, to help get these Liquified Nitrogen Gas and other oils out of the ground and into the global marketplace. A trade agreement with Germany for LNG will be a huge driver to the growth of our energy sector and our continued place as a global leader, in providing energy to countries in need. This agreement with Germany, is a move they continue to make since 2022 to minimize their dependence of Russia, after it's invasion of Ukraine. The sooner these projects can get funded and built in Canada, the sooner these types of contracts will expand our role in the global marketplace.
The earnings just released this week in Canada by our banks, was all very positive news. All the big banks, except for one, increased the quarterly dividend they pay, and all reported significant profits for the quarter. The banks are still putting aside money for potential bad loans at a high pace, but with the dividend hike, this is a promising sign that their balance sheets are secure, and the money put aside now, can be released in the future when there is less uncertainty in the mortgage/lending space.
We have also seen reports on Inflation and GDP released this month, both in Canada and the US. The results have illustrated quite a different picture. Both countries have faced increases in cost of living, due to high oil and gas prices, as well as high interest rates on loans. The inflation report in Canada showed that overall inflation ticked up to 2.8% year over year in April, but most of that was attributed to higher energy prices. When you exclude gasoline prices, inflation was at 2.0% year over year, right at the low end of expected rates. This is good news, and shows that the pain felt over the past few years with higher interest rates, has worked to bring price increases down. Over the coming years, wage growth will catch up to the drastic climb in prices from the past, and bring a balance to the standard of living being squeezed today. The US inflation report for April was also released with much higher numbers of a 3.8% rate for the past year over year. Most of this is caused by the increased gasoline prices, but also trade tariffs and related price increases, have pushed prices much higher in the US for consumers. With increased prices, consumption is likely to continue to fall. This was noticed in the US GDP released as first quarter growth is decreasing to an annual rate of just 1.6%, below the expected rate of 2.0%. While the Canadian economy showed a decrease in GDP as well to contraction of 0.1%, this could easily be revised upward in the future. There is not significant growth being reported right now, and 2025 was boosted by significant government spending programs, but with more trade agreements being signed, there are brighter days ahead for the Canadian economy.
The summer months will begin the negotiations for CUSMA with the US as well as more travel, and the FIFA world cup to Canada, to help drive more growth.
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