The first half of 2025 was a wild ride for investors, but it ended on a high note, and the next six months could deliver a similar mix of risk and reward.
After President Trump’s surprise “Liberation Day” tariffs rattled markets in April, stocks staged an impressive comeback when he paused the tariffs just a week later. The S&P 500 soared more than 10% in Q2, closing the first half at record levels. Easing tensions with China and a fresh trade deal with the UK helped calm nerves, while resilient jobs data kept fears of a deep slowdown at bay.
Looking ahead, Wall Street hopes the Federal Reserve may resume rate cuts, giving stocks another boost. Many banks have already raised their S&P 500 year-end targets, clawing back estimates slashed after the spring tariff shock.
Still, trade policy remains the biggest wildcard. Trump’s 90-day tariff pause expires July 9, and businesses are watching closely to see if new deals materialize or the deadline shifts again. “Until companies know where global trade is heading, many will stay frozen in place,” said Capital Group’s Cheryl Frank. For investors, that could mean headline-driven swings — and opportunities to grab quality stocks on sale.
There’s also a caution flag on valuations. The S&P 500’s price-to-earnings ratio has bounced back to lofty levels, raising questions about how much upside remains. “Markets aren’t priced for a downturn anymore,” Fidelity’s Jurrien Timmer warned.
International stocks may offer some balance: non-U.S. equities outperformed American ones in the first half and still look cheaper. Meanwhile, Big Tech and AI stocks — despite early setbacks — are back in favor as investors bet on strong balance sheets and future growth.
The bottom line? Expect noise, headlines, and surprises — but plenty of chances for savvy investors to make bold moves in the months ahead.
