First Half Results - Handicapping Rest of Year

 

General Stock Market Commentary, 2^nd Quarter and Year-to-Date, 6/30/25

Stock prices generally fell during the 1^st quarter; between 4% for the S&P 500 and down 10% for the Nasdaq stocks. The Dow Jones lost 1%. Then the
landscape changed.

If you were out-of-touch or asleep for all of April, you would not have noticed the tumultuous month starting the 2^nd quarter as President Trump announced his initial trade tariffs on April 2^nd. The quick 12% sell-off in stock prices lasted just 5 trading days! The monster stock rally of +10% on April 9^th should show you that timing the market accurately is very difficult.

April ended about break-even for stocks (S&P 500 down 1%). The paper losses have now been erased, and stock prices had a superb May and June. With those ups and downs, stocks are ahead +6% this year through June 30^th.

Bonds likewise had a wild ride post tariff maneuvering but are essentially unchanged since year-end as of June 30^th. The 10-year Treasury yield only declined 1/3rd of 1% this year to 4.22%. The Federal Reserve is not compelled to lower interest rates, while inflation and employment numbers continue to improve. The results of the tariffs have not translated to higher inflation in the US Economy - yet. The last Fed interest rate cut was last November, and the stock market has advanced about 5% since then. I would keep cash not invested in shorter term (3-6 month) U.S. Treasury bills or money market accounts; those pay 4% to 4.3% annually, and have been steady income for all of 2025. Warren Buffet’s Bershire Hathaway company owns $328 Billion of US Treasury debt in their last reporting. Let’s follow Warren!

In the commodity area, Gold continues to add to its gains from last year. It was up $500 an ounce in the 1^st quarter, and then added $180 more in the April - June stretch. That’s $680 by my calculation, or +27% so far this year, greatly helping your portfolios. No major stock category (sector) beat Gold this year; the closest challengers were Industrial’s, +11%, Telecom, +10%, Utilities, +9%, and Financials (banks), +9%. I’ve harped on this for 10+ years now, and continue to believe a weighting in Gold, or the precious metal investments that own physical Gold, can offset risks in the stock and bond markets. Three years ago; Gold was $2,000 or so; 5-years ago, near $1,700. Gold prices ended June at $3,303 per ounce. As I pen this on 7/21; Gold's within a dollar or two from $3,400!

What’s in store here as we enter the third quarter? Earnings are in focus now. Can they deliver as expected, or beat the estimates? First quarter numbers were fabulous. Management’s commentary on the second quarter results, and for the rest of the year will no doubt impact share prices up or down.

Then there’s the Federal Reserve’s decision – on if and when to lower interest rates. Inflation has been declining steadily for 3+ years (see chart for year-over-year inflation), signaling broad labor market stability.

 

Will the recently passed "Big Beautiful Bill" and its tax policy ignite our economy and raise the tax revenue, or will the tariffs offset or mitigate those benefits? 

As I say, there’s always something to worry about with the stock market, bond market, and other investments.

Controlling my anxiety and handicapping this all are my goals; in effect, I am a financial odds-maker, to benefit my family and my clients. 

Contact me if you have questions or comments.

~Barry
(954) 560-3622.