Q2 2025 Market Update

Equity Market Overview

Equities rebounded strongly following a historically swift sell-off in early April due to reciprocal tariffs announced by President Trump. 

The S&P 500 gained 10.9% by quarter end, recovering year-to-date losses and closing at a record high. The Nasdaq surged 18%, driven by renewed AI enthusiasm.

Growth stocks (Russell 1000 Growth: +17.8%) far outpaced value stocks (+3.8%) thanks to robust big tech earnings. 

Small caps underperformed but still performed well, gaining 8.5% vs. 11.1% for large caps, due to concerns about their ability to withstand trade-related disruptions.

International and emerging markets outperformed U.S. stocks, supported by a weaker U.S. dollar and rate cuts in Europe.

Fixed Income & Commodities

Core bonds rose 1.2%, with foreign bonds (unhedged) gaining the most (+7.4%), emphasizing demand for foreign investments during uncertainty around US markets. 

Commodities fell 3.1% overall. Gold continued its rally (+5.8%, +25.9% YTD), while oil dropped 8.9% due to trade tensions and increased OPEC+ output.

Crypto

Cryptocurrency volatility was high, following greater market trends. Bitcoin lows for the quarter were an early April low of around $75,000 and a June high around $111,000. 

Economic Outlook

GDP growth came in at 2.1% for Q2. Jobs data and inflation data remained consistent during the quarter (low unemployment numbers and elevated but stable inflation data). 

Future growth in the second half of 2025 will center around delayed tariff effects, inflation data, labor market growth, and a highly priced equity market. 

The Federal Reserve System (Fed) is likely to remain cautious, maintaining current rates longer than expected. Most Fed forecasts point toward cuts nearer the end of 2025, aiming at lower rates while remaining restrictive and positioned to respond to changing data.
 

Source: LPL Research, "Market Insight Quarterly, Second Quarter 2025"

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. 

Cryptocurrency and cryptocurrency-related products can be volatile, are highly speculative and involve significant risks including: liquidity, pricing, regulatory, cybersecurity risk, and loss of principal.