Quarterly Market Review: April-June 2025

The Markets (second quarter through June 30, 2025)

Throughout the second quarter of 2025, global trade tensions caused by reciprocal tariffs and increasing unrest in the Middle East impacted the markets on a daily basis. A new wave of tariffs, particularly against China, created widespread market anxiety and triggered a downturn in April. This was followed by a 90-day de-escalation period announced in May, which temporarily paused some of the heightened tariffs and led to a sharp market rally. The uncertainty surrounding ongoing trade negotiations and the potential for new tariffs remained a key source of volatility throughout the quarter. After a tumultuous start to the quarter, the market showed remarkable resilience and ended June on a high note.

U.S. stocks rebounded in Q2. The S&P 500 began 2025 by enduring its first negative quarter since 2023, and followed that by a decline in April. However, the S&P 500 rebounded later in Q2 to post sharp gains in May and June. The NASDAQ, which had declined over 10.0% in the first quarter, showed strength in the second quarter, driven by growth in AI shares and digital stocks. The Dow and the small caps of the Russell 2000 also closed the second quarter higher. Among the market sectors, the second quarter saw information technology climb more than 23.0%, while communication services rose nearly 20.0%. Energy, health care, and real estate were the only market sectors to lose ground at the end of Q2. The bond market in the second quarter was characterized by heightened volatility and a complex interplay of economic and geopolitical factors, primarily driven by evolving tariff policies and persistent inflation concerns.

While inflation did not escalate to the level some analysts anticipated due to increased tariffs, consumer prices remained somewhat elevated. The Consumer Price Index (CPI) and the personal consumption expenditures (PCE) price index gradually decreased, easing some of the inflation fears that had built up earlier in the year. Despite the moderation, inflation remained above the Federal Reserve's 2.0% target. The Fed maintained a cautious stance on interest rates, keeping them unchanged, as it balanced the need to control inflation with the potential for an economic slowdown. Corporate earnings reached new highs in the first quarter. While analysts projected slower growth in Q2, early returns on earnings have been mostly favorable, offering cautious optimism for companies in the second quarter. Job growth, while steady, also declined in Q2. The unemployment rate edged up to 4.2% in the second quarter. Both new claims for unemployment benefits and continuing claims rose during the second quarter...

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Wendy Nelson, CEO of Wind River Wealth Advisors, aims to provide comprehensive investment management, retirement planning, financial planning, asset management, and portfolio management services to protect your money with knowledgeable strategies and plans through the guidance of a personal, independent financial advisor.