What a ride!
The 2nd Quarter of 2025 is behind us, leaving investors woozy from the wild ride they just encountered. Concerns over the unknown impact of tariffs and their impending implementation caused investors to reel back, only to be relieved by the announcement that the implementation of heavy tariffs on trade would be delayed. The markets leapt forward from lows to highs this quarter. US markets ended the 1st quarter of 2025 at lows we have not seen since 2022. As I write this report at the end of the 2nd quarter, we are looking at a surge off the lows like a Space X rocket launching off its pad as investors “bought the dip”. Strong corporate earnings for S&P 500 and NASDAQ companies led the way. Small Caps and Value Stocks did not fare as well. This revealed that high value Mega Caps outperformed, which signaled to investors that a broad-based market expansion was not the reason for market growth this quarter. Energy and healthcare sectors lagged. “Drill Baby Drill” means more energy supplies and less profit for the energy sector. Meanwhile investors’ concerns over price reductions of pharmaceuticals caused the healthcare sector to wilt. Will “Sell the Rip” lead investors to take profit in overvalued stocks? Or will it lead to “Flight to Safety” over concerns that the July tariff reprieve deadline approaches lead investors to lock in gains? Smart money will eventually reveal their hand.
The US markets were not the only bright spot for investors this quarter. International and emerging market stocks outperformed the US stock market as we saw the Dollar’s valuation freefall having its worst start since Richard Nixon took the US off the Gold Standard. This led investors overseas, causing international markets to surge past US markets. Industrials moved higher as NATO lifted defense spending limits. The Real Estate sector benefited from the European Central Bank cutting interest rates twice this quarter, by 25 basis points each meeting. The United Kingdom’s markets benefited from lower interest rates as well, with the Bank of England reducing rates by 25 basis points to 4.25%.
Japan and Emerging market equities expanded as fears over hefty US tariffs were delayed until July.
Bond yields remained elevated this quarter. The Federal Reserve has not acted to lower interest rates since December of 2024, citing concerns of the possible impact of tariffs. This, coupled with Moody’s downgrading of US debt from Aaa to Aa1, caused bond yields to spike and prices to decline. Recession concerns surfaced. Higher mortgage rates and loan costs continued to slow down the real estate market and restrict consumer borrowing.
Gold and precious metals have benefited from the weakening dollar. Gold struck a $3300 per ounce high as other precious metals, like silver, followed suit. Flight to safety and a weaker US dollar pushed demand for the physically tangible.
Does all this up and down in multiple markets have those you know head’s spinning? Are they concerned about how the constant changes in market conditions and volatility impact the value of their underlying investments and strategy? We welcome the opportunity to assist them. We would be honored to serve those you know who would benefit from a relationship with us at Renew Family Wealth. Please let us know who you would like to introduce us to, so that we may provide them with the peace of mind you find in our relationship.
Thank you for the opportunity to serve you, your families, friends and associates.
Sincerely,
Scott Miller
