Something interesting happened in the US stock market in mid-May: Despite significant volatility this spring, on May 13, the broad US stock market (as represented by the Vanguard Total Stock Market index fund, VTI) returned to the same level where it started the year, and through June 4 it is up 1.22% year to date. This means that if you had started investing in the broad US stock market at the very beginning of 2025 and simply held onto your investments through the tariff turmoil until mid-May, you wouldn’t have lost any money, and in fact would have generated a positive return. And if you kept investing during market lows, you might have done even better. 

This shift in the markets has also seemingly influenced Wealthfront clients’ perspectives. Here’s what we’ve heard and seen from Wealthfront clients in May.

  • Optimism is on the rise: May 2025 was the best month for the S&P 500® index since November of 2023, and clients have taken notice. When we surveyed Wealthfront clients in late May, 55% of respondents said they were somewhat or very optimistic about the US stock market over the next six months. This is a significant increase compared to the survey we fielded in April, in which only 42% of respondents were somewhat or very optimistic.
  • Clients are investing and considering adding to their financial safety nets: Wealthfront clients are feeling more positive about the direction of the US stock market—they continued investing through the April US stock market volatility, and more than a quarter of those surveyed say they plan to invest more in US stocks in the future. At the same time, survey responses suggest they’re also preparing for future uncertainty. About half of clients surveyed said they plan to save more in cash going forward, while about a quarter said they plan to invest more in global stocks. In other words, it appears that many Wealthfront clients plan to use a variety of assets across the risk spectrum to prepare for whatever comes next.
  • Market volatility isn’t necessarily over: Uncertainty, as uncomfortable as it can be, is a fact of life for investors. A strong month of US stock market performance doesn’t mean volatility won’t return. But the speedy recovery from April’s deep drawdown is a good reminder that staying the course with your investments can be very good for your bottom line. And if you took advantage of tax-loss harvesting and dollar-cost averaging opportunities during the volatility earlier this year, you may have even come out ahead on your US stock holdings: Not only did you buy investments “at a discount,” you should have potentially valuable losses to use to lower your tax bill come tax time next year. 
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Disclosure

The information contained in this communication is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation or offer, or recommendation, to buy or sell any security. Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC-registered investment adviser, and brokerage related products, including the Cash Account, are provided by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a Member of FINRA/SIPC. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Please see our Full Disclosure for important details.

About the author(s)

Alex Michalka, Ph.D, has led Wealthfront’s investment research team since 2019. Prior to Wealthfront, Alex held quantitative research positions at AQR Capital Management and The Climate Corporation. Alex holds a B.A. in Applied Mathematics from the University of California, Berkeley, and a Ph.D. in Operations Research from Columbia University.