Markets Return to Record Highs in June as Investors Remain Hopeful
The stock market turnaround that began in May continued in June. Calmness and steady growth characterized the markets as tariff fears eased further, and investors stayed focused on positive economic data. Will this trend continue, or could the extreme volatility we saw in March and April make a comeback?
Before we discuss that, let’s take a closer look at Wall Street’s remarkable turnaround. As you’ll recall, the markets tumbled in March and April after the president announced a plan to impose huge new tariffs on some of our biggest trading partners, most notably China, Mexico, and Canada. As the weeks rolled on, the plan went through numerous revisions, creating an air of uncertainty that kept investors on edge. The S&P 500 plunged by nearly 10%, just missing bear market territory, as the Dow Jones Industrial Average and Nasdaq also suffered steep losses.
By late April, however, the president had softened his rhetoric considerably and announced a 90-day delay on imposing his steepest tariffs. What’s more, much of the Q1 economic data coming out at that time was relatively strong. With that, investors began turning their attention away from tariff worries and toward more positive news.
That positive trend continued throughout May and June, helping the markets stage a V-shaped recovery over those two months. The S&P – the stock market’s broadest index – rebounded by 6% in May and rose another 4.96% in June, putting it up by 5.5% for the year. Both the S&P and Nasdaq are now at new record highs.1
What’s Next?
Despite all this, some economists are advising caution as the second half of the year gets underway, noting that the tariff issue hasn’t really gone away and that numerous other issues could potentially rattle the markets in the coming months. One of those, of course, is the ongoing war between Israel and Iran, especially now that the U.S. is directly involved in the conflict.2
Economists also point out that consumer demand is softening, global factory activity is showing signs of stalling, and certain sectors of the labor market may be slowing. And although investors have managed to shift their focus away from tariffs for now, that could change once more of them kick in. As one Bank of America economist put it, while there are no clear red flags for the economy heading into the second half of the year, there are several yellow flags.3
Of course, the biggest issue that may determine how the markets perform going forward is the Republicans’ massive new tax bill, which was approved by Congress by the narrowest of margins on the day the newsletter went to press. Although the plan is highly controversial, as far as Wall Street is concerned, any plan is better than no plan since businesses need the certainty of a finalized tax code to make decisions and plot their strategies for the future. The markets are forward-looking, after all, and it’s difficult to gauge the future without knowing how tax laws might impact corporate earnings and other aspects of the economy.
So, again, love it or hate it, approval of the Republican tax bill is likely to be a major factor in helping the markets remain stable and continue growing in the months ahead.
Your Portfolios
Naturally, the return of calmer, stronger markets has been good for investors across the board, including those focused on income-first, growth second. Those of you in our most conservative portfolios of bonds and bond-like instruments should see your values up by about 3% for the year on average in your latest statement, depending on your individual holdings. That, of course, puts us back on track on a pro rata basis for our year-end target goal of 6%-7%, which is good news.
So, just as big investors are doing right now, I would encourage you to stay focused on the positive and enjoy your summer. In addition to the market turnaround, it’s also worth noting that inflation is still holding steady at a normal rate of about 2.4% despite predictions from early in the year that it would start creeping up again. Long-term interest rates have also been holding fairly steady, with the rate on the US 10-year treasury note starting June at 4.45% and ending the month at 4.22%.4
Of course, the best news, as always, is that even if the markets do get rocky again and the economy takes a turn for the worse, you can take comfort in knowing that you have an investment strategy that helps protect you against real losses and ensures your income return is unaffected no matter what!
As always, call our office at any time if you have any questions or concerns. Happy Independence Day and have a great July!
Sources:
1. https://www.cnn.com/2025/06/30/investing/us-stock-market
2. https://www.reuters.com/world/middle-east/trump-announces-israel-iran-ceasefire-2025-06-23/
3. https://finance.yahoo.com/news/us-economy-on-wobbly-footing-why-wall-street-strategists-are-cautious-about-stock-markets-recent-records-185429502.html
4. https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. Wright Financial Group LLC and Sound Income Strategies, LLC are not associated entities. Wright Financial Group LLC is a franchisee of Retirement Income Source. Retirement Income Source and Sound Income Strategies LLC are associated entities.