June Recap & Looking Ahead to July
First Half 2025 Recap & Second Half Market Outlook
At WWM, we believe successful investing isn’t about perfectly predicting the future. It’s about staying grounded in what’s happening now, understanding where we are in the cycle, and positioning portfolios accordingly. The first half of 2025 offered a powerful reminder of how important that approach is.
Where We’ve Been: The First Half of 2025
The past six months were defined by four major themes:
The Economy Slowed Down
First-quarter GDP was revised to show a –0.5% contraction, as consumer spending lost steam after a strong end to 2024.
Early Q2 data echoed that trend, with retail sales and durable goods purchases softening as households grew more cautious.
Inflation Continued to Ease
Headline CPI rose just 0.1% in May, bringing the annual rate down to 2.4%. Core CPI held steady at 2.8%.
Meanwhile, the Fed’s preferred inflation gauge — Core PCE — hovered around 2.3%, inching closer to the long-term target.
The Labor Market Softened (But Stayed Resilient)
The U.S. added 139,000 jobs in May, while the unemployment rate held at 4.2%.
However, continuing jobless claims reached their highest levels since 2021 — signaling that while layoffs remain low, it's taking longer for displaced workers to land new positions.
Tariffs Returned to the Spotlight
The so-called “Big Beautiful Bill” officially passed through Congress. While not its formal name, that’s how many have come to refer to this sweeping industrial policy legislation.
Now signed into law, the bill introduces broad-based tariffs on imports and offers incentives to spur domestic manufacturing.
Markets are responding to the potential for renewed inflationary pressures and shifts in global trade as the policy takes hold.
How Markets Reacted
Despite slowing growth, markets showed surprising resilience:
The S&P 500 closed Q2 at record highs, fueled by optimism that the Fed could begin cutting rates later in the year.
Long-term bond yields drifted lower, reflecting confidence that the hiking cycle is behind us.
Commodity prices were mixed, with oil stabilizing following a de-escalation in Middle East tensions, and industrial metals remaining volatile amid tariff speculation.
Looking Ahead: Key Questions for the Rest of 2025
Three major questions will likely shape the market narrative in the second half of the year:
Will Growth Stabilize or Weaken Further?
Rising jobless claims and cautious consumers raise the odds of a mild recession.
Still, moderating inflation and the potential for Fed rate cuts could support modest economic growth.
When Will the Fed Make Its First Move?
The Fed held rates steady at 4.25–4.50% in June. Market consensus expects a cut by September or October — but much depends on the next few inflation and employment reports.
How Will Tariffs Reshape the Economic Landscape?
With the “Big Beautiful Bill” now law, tariffs are likely to push import prices higher, adding inflationary pressure.
However, incentives for domestic production may offer upside for select U.S. industries.
The Fed will need to balance these new pressures against an already slowing economy.
How We’re Positioned: Gather & Preserve™ in Action
Periods like this — with competing signals from data, policy, and geopolitics — are exactly what our Gather & Preserve™ process is built for.
Here’s how that philosophy translates into positioning today:
✅ Maintaining diversified equity exposure, especially to companies with pricing power and agile supply chains
✅ Allocating strategically to fixed income, capturing attractive yields with potential for price appreciation if rates fall
✅ Preserving liquidity, ensuring we’re ready to act if volatility creates opportunity
Final Thoughts
Markets respond not just to data, but to policy and psychology — and we saw all three at play in the first half of 2025. Tariffs, inflation, Fed policy, and global tensions will all continue to shape market behavior in the coming months.
At WWM, we remain focused on managing portfolios with clarity, care, and conviction. Our mission is to help clients Gather & Preserve™ their wealth — no matter what headlines or cycles lie ahead.
Sources:
Bureau of Economic Analysis: GDP
Bureau of Labor Statistics: CPI, Core PCE, Employment Reports
Reuters, Bloomberg, Kiplinger: Fed Policy Expectations, Market Data, Trade Legislation Updates