Q2 2025 Market Review
It was clearly a volatile quarter with several different crosscurrents driving global markets including a massive sell-off in early April associated with the “Liberation Day” tariff announcements and a relatively quick recovery as tariff implementations were delayed to allow time for countries to negotiate a better deal with the United States.
U.S. stocks put up another strong quarter with the large cap S&P 500 ending at new highs, however, there was quite a bit of turbulence getting there. Investors entered the quarter cautiously after a difficult start to the year as concerns over President Trump’s yet-to-be-announced trade policies and doubts regarding the longevity of the AI trade had investors taking profits in the large cap growth stocks that had driven markets over the last several quarters and taking a more defensive stance in Consumer Staples, Health Care, and other risk-off assets such as U.S. Treasuries. As it turns out, investors still underestimated the aggressiveness of the President’s initial plan as the tariffs announced on “Liberation Day” were significantly more aggressive than most expected. This led to another material sell-off with the S&P down nearly 20% from its February highs to its lows in early April. The tone of global markets completely shifted on April 9th when the president paused the latest round of tariffs. The S&P 500 then rallied 25% to the end of the quarter. We saw similar action across the cap spectrum, but we would note the very strong rebound for the growth indices in the quarter as AI fundamentals remained strong helping alleviate some of the concerns that surfaced in the first quarter.
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