The US stock market faces several key questions as the second half of 2025 begins. Investors are closely watching the impact of tariffs on corporate earnings and inflation. They are also speculating about the timing of potential Federal Reserve rate cuts.
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The performance of big tech companies is another area of interest. Investors will be watching to see if the tech sector can lead the market again. There are also debates about stock valuations and whether they are becoming unsustainable.
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Some doubts are emerging about the idea of “U.S. exceptionalism.” This is the notion that the US market will continue to outperform global competitors. Investors will be comparing the S&P 500 to global indexes to gauge this. Geopolitical tensions remain a wildcard that could significantly impact the market.
Any re-emergence of major geopolitical risks could add complexity for investors. At the halfway point of the year, investors are clearly seeking resilient trades. Matt Bartolini of State Street Global Advisors noted that “we’ve seen investors building more resiliency into their portfolios.”
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One significant trend in the first half was increased investment in international stocks.
John Davi of Astoria Portfolio Advisors observed that it was a period for constructing multi-asset portfolios.
Investors seek resilience amidst uncertainties
This included assets like gold and commodities.
However, predicting the future path of these assets remains challenging. The recent dips in gold and oil prices were notable but may be short-term fluctuations. Davi cautioned against placing too much emphasis on them.
Wall Street strategists have varying outlooks for the rest of 2025. Mike Wilson of Morgan Stanley anticipates a recovery next year as recession risks decrease. The bank sees potential rate cuts boosting market valuations.
JPMorgan expects a softened economy without a recession. They predict the S&P 500 will be supported by strong tech and AI fundamentals. Wells Fargo believes multiple tailwinds can push the market to new highs.
Goldman Sachs expects continued volatility but sees potential in diverse areas. Bank of America predicts a resilient US economy despite trade tensions with China. Overall, while acknowledging uncertainties, many strategists are cautiously optimistic about the second half of 2025.
They advise investors to remain focused on building resilient portfolios to navigate the ongoing market complexities.