Market Review

As of June 30, 2025

Source: FactSet

The roller coaster quarter ended with record highs for stocks as trade, geopolitical tensions faded, and company earnings proved resilient. A globally diversified 60/40 stock/bond moderate risk portfolio gained 8.8% in the second quarter, as stocks and bonds gained. The U.S. dollar slump helped international investments outperform.

U.S. equities made a dramatic comeback to close the quarter at record highs on solid corporate earnings, retail investors buying the dip, and companies buying back their own shares. S&P 500 gained 25% from the lows post“liberation day” tariffs announcements to finish the quarter up 10.9%. The sell-off and the subsequent recovery were concentrated in a handful of large AI-focused technology companies dubbed the Magnificent Seven (Mag 7) - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Mag-7 gained 18.6%, outperforming the remaining 493 stocks in the S&P 500 by 14% during the second quarter, but the group lags in performance for the year.

Within the U.S. equity markets, there was wide dispersion and a reversal of what worked in the first quarter. Fastgrowing technology companies had strong returns while defensive companies across energy and healthcare fell. As for size, smaller companies trailed their larger peers as the recovery was concentrated in large technology firms.

Progress on tariffs, easing geopolitical tensions, and a falling U.S. dollar helped international markets outperform. Additionally, domestic spending on defense and infrastructure helped stocks in Europe to gain 12.7%. Easing trade tensions between the U.S. and China helped Emerging Markets gain 12.2% for the quarter.

International bonds had strong returns on the heels of a weak dollar. In local currency, international bonds were up 1.9% vs 7.3% in dollar terms. Higher-quality U.S. bonds ended the quarter up 1.2%, while lower-quality bonds gained 3.5% as investors' appetite for risk returned.

Finally, across other asset classes, gold gains while oil falls. Gold, the ultimate safe port in an economic storm, continued its climb higher, gaining 5.2% and now sitting on a 24% gain for the year. Gold's rally was also partly driven by a weaker dollar.