The
Financial
Quarterly
Quarter 2 2025
Markets came roaring back in the second quarter after a bruising start to the year, with indexes hitting new record highs.1
Can stocks keep rallying in the face of tariffs and growth fears?
Let’s review what happened in Q2 and what could lie ahead.
Looking Back
How Did Markets Perform Last Quarter?
S&P 500
10.6%
The broad market index notched a new record high during a stellar quarter.1
NASDAQ
17.8%
The tech-focused NASDAQ soared as optimism returned.1
DOW 30
5.0%
The blue-chip Dow grew with the broader market, turning in a solid performance.1
Looking Ahead
What Factors May Influence Markets in the Months to Come?
Let’s take a look ahead at some of the factors that we’ll be watching in the weeks and months ahead.
Tariffs
Tariff talks are ongoing, and while worst-case scenarios appear less likely, the timing and extent of their potential drag on profits remain uncertain. Conversely, deregulation and favorable tax policies may offer offsetting macro tailwinds.
Economic Growth
Fundamentals are the driver of long-term returns, they have favored US stocks for much of the last 15 years, but we continue to monitor international markets for improving fundamentals.
Labor Market
We continue to believe that the consumer (68% of GDP) remains the key support to economic growth in the 2nd half of 2025. While the recent consumer spending numbers have shown a slowdown, most likely impacted by tariff uncertainty, solid labor market data underpins the strength of the consumer, and therefore the economy overall.
Interest Rates
As another means of reducing our interest burden, the Treasury may manage its debt maturities by issuing short-term at rates likely to decline alongside future rate cuts, and paying down debt on the long end, which would in turn apply downward pressure on long-term rates.
“Positive quarters are welcome, but they're just one chapter in a much longer story. Strategic planning and ongoing management matters.”
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Bottom Line
Key Takeaways
Markets defied expectations, but the rally raises some questions. Q2's strong performance shows markets can bounce back quickly.
Policy wildcards remain in play. Trade policy keeps evolving unpredictably after months of negotiations, while Fed decisions also remain uncertain. Markets may react quickly to policy surprises, particularly if tariff policy gains clarity or if the Fed shifts course on interest rates.
Our outlook: optimism with vigilance. While we continue to favor a defensive portfolio posture, targeting value stock and defensive sector tilts, along with available dry powder, we aren’t sitting on our hands. Since our last update in mid-April, we capitalized on that volatility by selectively inching into growth at attractive valuations, partially reducing our value tilt.
Volatility and higher rates have continued to provide opportunities in fixed options and principal protection products. If you haven't looked into how these options can benefit you, now is the time!
New Tax Policy and Planning Opportunities. Signed into law July 4th, 2025, the One Big Beautiful Bill Act (OBBBA) significantly reshapes the tax landscape for millions of Americans. While it cements many provisions from the 2017 Tax Cuts and Jobs Act (TCJA), it also introduces critical changes to tax deductions.
Questions about markets, policies, or your portfolio? Please reach out—we'd be happy to discuss.
Content prepared by Snappy Kraken.
All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
This guide is provided for informational purposes only; it is not designed as advice for an individual’s personal situation. The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. Our firm does not provide, and no statement contained in the guide shall constitute, tax or legal advice. All individuals are encouraged to seek the guidance of a qualified professional regarding their personal situation.
The S&P 500 is a stock index considered to be representative of the U.S. stock market in general. The NASDAQ Composite Index is an unmanaged composite index of over 2,500 common equities listed on the NASDAQ stock exchange. The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly traded American companies.
All index returns exclude reinvested dividends and interest. Indices are unmanaged and cannot be invested into directly.
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Michelle Bertram
Bertram Financial
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