The second quarter of 2025 was filled with news of an aggressive trading policy shift and geopolitical tensions. Yet, while the S&P 500 narrowly avoided a bear market in early April, the remainder of the quarter saw a sharp rebound to new all-time highs.
Investors were focused on oversold growth stocks once it became clear that the proposed extremely high tariff rates were more of a negotiating tool rather than a permanent rate hike. International stocks continued to perform well due to the falling US Dollar and rising European and Asian currencies. Meanwhile, the fixed income markets were mixed with shorter maturity bonds outperforming their long maturity counterparts.
We expect that near term market conditions will remain cloudy with the tariff impact, slowing economic growth and sticky inflation creating hurdles for the second half of the year. The bright spot in all of this is that companies and analysts have significantly reduced earnings expectations for this quarter and full year. Perhaps too far. Any outperformance from corporate earnings should help support the markets, along with tariff resolution, moderating inflation and an accommodative Federal Reserve.
For more detail, please click on this link: Q2 2025 Review & Outlook
We close with a quote from legendary investor, Peter Lynch, Fidelity Magellan Fund Manager:
“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”
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