Recent Markets: Q2 2025

The first half of 2025 has been anything but dull, and uncertainty still has many scratching their heads trying to plan their next moves. Yet, many investors with broadly diversified long-term investment strategies have ended a volatile 2nd quarter with positive returns.

Year-to-date returns for established asset classes were led by gold, up 26%, followed by foreign stocks, up about 20%. U.S. stocks, as measured by the S&P 500, ended with a positive 6%. The lagger for the period was U.S. small-cap stocks, represented by the Russell 2000, down -2%. Bonds were up 3 to 5% depending on length of duration.

Within these numbers, however, is a story of a wild 90 days of price swings: the S&P 500 dropped 19% from its high on February 19th, only to recover 24% from the depths of the April tariff-induced selloff. During this period, investors went from exuberance about deregulation to despair over a global trade war and then to relief that the Trump tariffs might not be as onerous as initially feared.

There are still obvious risks that the initial, or currently paused, tariffs haven’t hit the data yet. Some believe it is only a matter of time before tariffs harm economic growth, rekindle inflation, lead to higher unemployment, and weigh on corporate earnings.

Others believe that economic activity will remain resilient, labor will hold up, and inflation will not move higher. Additionally, there is themajor tax and spending legislation currently going through Congress and its potential impact on the markets, business activity, and investors.

U.S. stocks hardly look cheap, with the S&P 500 trading at 22 times the projected 12-months earnings compared to the 10-year average of 19 times. However, several stocks are moving higher, with more stocks rising versus those declining. This is often seen as a sign of a healthy stock market worthy of sustained upward momentum.

Can you take all the data and make a reliable prediction for the second half of the year? As Dr. Burton Malkiel once said, “Forecasts are difficult to make – particularly those about the future.” We won’t make a prediction. There are always reasons not to invest, but as history has shown, markets move higher over time. We believe that financial markets are efficient and reward investors willing to live through the ups and downs with higher stock prices in the future.

Let us know if you have questions.

The information provided is educational and general in nature and not intended to be, nor should it be construed as investment, accounting, tax, or legal advice. It should not be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any transaction. Information herein was prepared by or obtained from sources that we believe to be reliable and is meant for general illustration purposes. Cooke Wealth Management makes no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this report. It is provided for your personal use and information purposes only.
Past performance does not guarantee future results. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. Market conditions can vary widely, and market and economic events having a positive impact on performance may not repeat. No diversification or asset allocation strategy can eliminate investment risk, losses, or protect against loss in declining markets. All investments involve risk including loss of principal. Investing in fixed income securities (bonds) involves interest rate risk, credit risk, and inflation risk. Investing in stocks involves volatility risk, market risk, business risk, and industry risk. International investing involves additional risks including, but not limited to, changes in currency exchange rates, differences in accounting and taxation policies, and political or economic instabilities which can increase or decrease returns. Investors should consider the objectives, risks, and charges and expenses of an investment carefully before investing.
Any index or benchmark included is for illustration purposes. Indexes are unmanaged baskets of securities that investors cannot directly invest in. They do not reflect the deduction of fees or expenses and assume the reinvestment of dividends and other income. The Dow Jones Industrial Average (DJIA) is Composed of 30 “Blue-Chip” US Stocks. THE DOW and DOW JONES INDUSTRIAL AVERAGE are registered trademarks of Dow Jones Trademark Holdings LLC (“Dow Jones”). The S&P 500 Index measures the performance of large-capitalization U.S. stocks. It is an unmanaged market value-weighted index of 500 stocks that are traded on the NYSE, AMEX, and NASDAQ. The weightings make each company’s influence on the index performance directly proportional to that company’s market value. S&P 500 is a registered trademark of Standard and Poors Corporation a division of McGraw-Hill Companies, Inc.