2025 Markets: The First Half in Numbers

This comprehensive handy reference guide rounds up market returns and economic data as of June 30, 2025. Market performance includes data for a wide variety of asset classes, sectors, indexes, and more. The economic data includes interest rates, GDP, inflation, and labor statistics.

If I had to choose a single word to characterize what single-handedly had the biggest impact on markets in the first half of the year, it would undoubtedly be “tariffs.”

Why tariffs? Or is the rationale too obvious? The president’s April 2 announcement of “Liberation Day” (reciprocal) tariffs sent stocks into a tailspin, with the S&P 500 Index losing over 10% in the two days that followed the unveiling of the reciprocal tariffs.

Unlike a market correction or bear market, a market crash lacks a precise definition. However, a sudden drop of 10% or more over just two trading days would likely meet the classification.

From its early-year peak on February 19 to its most recent low on April 8, the S&P 500 fell 18.9%. However, the closely followed index narrowly avoided a bear market after the president announced a 90-day reprieve on the steepest tariffs.

Later that month, the president announced he would retain Federal Reserve Chair Jerome Powell, and stocks extended their gains, with both the S&P 500 and the Nasdaq reclaiming previous highs on June 27 and extended gains on the following trading day, June 30.

In a ruling addressing the removal of independent agency commissioners, the Supreme Court went out of its way to suggest that the president’s authority over officials from various boards and agencies does not extend to the Federal Reserve. Powell’s term ends in May 2026.

Prior to the court’s ruling, most legal scholars believed that a Fed chair could only be removed for cause, a term that courts have historically interpreted as requiring “inefficiency, neglect of duty, or malfeasance in office.” The mere uncertainty surrounding such a removal from his position was a risk few investors wanted to entertain.

Separately, tariffs have contributed to inflation-related uncertainty, prompting the Fed to delay rate cuts despite the recent easing in price pressures.

What fueled the market’s advance since the most recent bottom?

For starters, the delay in the steepest tariffs, which threatened to spark an all-out trade war, and confirmation by the president that Powell’s job is safe, removed the stiffest headwinds earlier in the year.

As we entered July, Trump has not been shy about expressing his displeasure over the Fed’s perceived intransigence over rate cuts. Recently, the president’s National Economic Council Director said the president can fire Powell with cause. He cited a costly renovation project at the Fed as a possible cause. Through mid-month, investor action has been muted.

But let’s not discount the positives that have helped fuel new highs.

While economic growth appears to be moderating, the economy continues to expand, providing support for corporate earnings.

Interest rates and yields have remained relatively steady, and the Federal Reserve’s latest projection still includes two potential rate cuts this year.

Though the full effects of the latest broad-based tariffs may not be reflected in prices, inflation has been trending lower.

The most severe tariffs have been postponed (for now), and there’s discussion around potential new trade agreements.

The AI-driven momentum that has powered larger technology firms remains intact.

Investors have been eager to “buy the dip.” Despite the rally, the AAII Investment Sentiment Survey was slightly bearish when compared to the historical averages (through 6/25/25). In other words, through the end of June, we were not seeing excess euphoria in sentiment.

Sources: FactSet, Dow Jones Market Data, WSJ. S&P Dow Jones IndexesYTD: December 31, 2024 – June 30, 2025

Upbeat earnings

S&P 500 profits have registered double-digit earnings growth over three of the last four quarters, which has underpinned equities.

Bottom line: An improving economy has helped power sales, and profit margins have stabilized amid the slowdown in cost pressures.

Data source: LSEG

Record Q1 stock buybacks

S&P 500 Q1 2025 buybacks set a quarterly record of $293 billion, which was up 20.6% from Q4 2024’s $243.2 billion and up 23.9% from Q1 2024’s $236.8 billion, according to S&P Global.

The prior record of $281.0 billion was set in Q1 2022.

For the 12-month period ending in Q1, buybacks were $999.2 billion, up from $816.5 billion for the prior 12-month period; the 12-month peak was in June 2022 with $1.005 trillion.

Buybacks remained top-heavy, with the top 20 S&P 500 companies accounting for 48.4% of Q1 2025 buybacks, down from Q4 2024’s 49.0%, and above the historical average of 47.7% and above the pre-Covid historical average of 44.5%.

While we may see a dip in Q2, “The full year 2025 appears on track to set a new expenditure level, even as the earnings per share impact from buybacks will be well off a record impact,” said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indexes.

“The expected record is contingent on earnings holding their expected record level for 2025.”

The 1% excise tax on net buybacks reduced Q1 2025 operating earnings by 0.50%, up from Q4 2024’s 0.37%, according to S&P Global.

“The 1% tax continues to be a manageable expense and has not impacted overall buybacks at this point,” Silverblatt added.

The five issues with the highest total buybacks for Q1 2025 were:

• Apple (AAPL): $26.2 billion in Q1, down from Q4 2024’s $26.5 billion. Apple holds 18 of the top 20 record quarters.

• Meta Platforms (META): $17.6 billion for Q1 2025, up from $3.9 billion in Q4 2024.

• NVIDIA (NVDA): $15.6 billion for Q1 2025, up from $9.7 billion in Q4 2024.

• Alphabet (GOOG/GOOGL): $15.1 billion for Q1 2025, down from $15.6 billion in Q4 2024.

• JPMorgan (JPM): $7.5 billion for Q1 2025, up from $4.3 billion in Q4 2024.

Source: S&P Dow Jones Indexes

Key S&P 500 sectors—Tech and Communication Services

Industrials led the way during the first half of the year.

General themes include the recovery in aerospace, infrastructure, re-shoring, and automation.

The communication sector benefited from outperformance by Meta and Netflix.

Meanwhile, financials outperformed the S&P 500 amid upbeat profitability, regulatory relief, and cautious optimism from investors regarding economic prospects.

On the flip side, healthcare, which has bright long-term prospects, lost ground in the first half.

Policy and regulatory uncertainty have emerged, while managed care providers have been pressured by rising costs.

Consumer discretionary stocks have also struggled, in part because shares of Tesla are down sharply this year. General themes including trade and tariffs tension have also created headwinds.

Data Source: StockChartsYTD through 6/30/2025

Around the world

Despite a simmering trade war, one that may ultimately inflict more pain on U.S. trading partners than on the U.S. itself, international stocks have surged this year, aided by a weakening dollar and growing talk that American exceptionalism may be fading.

But there’s more to the story.

Fiscal and monetary stimulus is arriving at a moment when Europe’s equity valuations remain historically low, making the region increasingly attractive to investors. Policy changes include a major fiscal lift from Germany as well as higher defense spending. Separately, the European Central Bank has cut rates several times this year.

Adding to the momentum, European banks just posted their strongest first-half performance since 1997, according to Bloomberg, with profitability prospects still looking favorable.

Meanwhile, Latin American valuations have been discounted relative to its global peers, especially U.S. stocks (Table 6). As commodity prices stabilize, resource-rich countries have seen renewed interest.

Data Sources: FactSet, Dow Jones Market Data, WSJYTD through 6/30/2025

Table 6 highlights that the decline in the dollar has aided returns for U.S. investors.

Data Source: MSCI.comYTD through 6/30/2025

Style—Large-cap growth takes top honors again in 2025

Once again, large-cap growth claims the top spot in the U.S. equity landscape, delivering a solid 8.76% return in the first half. The category continues to lead over the 1-, 3-, and 5-year periods as well—driven by the outsized performance of fast-growing mega-cap tech names.

Conversely, rate and economically sensitive, domestic-focused small-cap U.S. stocks continue to underperform despite attractive valuations relative to large-caps. According to Yardeni Research, the forward P/E ratio for the S&P 600 Small Cap Index was hovering near 15.0 at the end of the first half of 2025. Further, investor preference remains focused on larger companies.

Outperformance in international ETFs highlighted the benefits of global diversification, especially as non-U.S. markets capitalize on local policy shifts and currency tailwinds.

Separately, U.S. bonds turned in a respectable performance through June. Notably, economic headwinds have not significantly impacted high-yield debt.

Source: iSharesThe performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted.Data through 6/30/20251-year, 3-year, 5-year returns as of June 30, 2025

Yields inch higher

The Fed has control over the short end of the yield curve and can influence but does not control yields at the longer end of the curve.

Yields on the 2- and 10-year Treasury notes are modestly lower year-to-date but have crept higher off the trough as markets reassess risks tied to tariff-driven inflation and a surge in bond issuance stemming from historically large federal deficits.

In addition, there has also been a modest rotation out of U.S. assets, which may include bonds.

Notably, the 10-year breakeven rate, which is a market-based indicator of inflation, has been stable.

Data Source: St. Louis Federal Reserve*Proxy for the yield curve**Breakeven Rate: 10-year Treasury yield minus 10-year TIPs yield, which provides a proxy for 10-year inflation expectations (what yield an investor is willing to give up for inflation protection).

Corporate bonds

Investment-grade corporate bond yields have taken a similar path to Treasuries.

Yet, the spread between Treasuries and high-yield (junk) debt has narrowly widened.

Most of the action in high yield occurred when financial markets were rattled by Liberation Day tariffs. When the steepest of the tariffs were delayed, high-yield markets settled back down.

Why do analysts monitor the high-yield spread? A wider spread signals a rising risk premium for holding junk bonds, often reflecting concerns that a weakening economy, or expectations of one, could strain the cash flows of lower-rated, below-investment-grade companies.

Today, the narrow high-yield spread signals that bond market participants are not fretting over the possibility of a recession or steep economic slowdown.

Data Source: St. Louis Federal Reserve‘BBB’ is the lowest grade of investment debt.*ICE BofA US High Yield Index Option-Adjusted Spread measures the difference between the yield on high-yield bonds and long-term Treasuries.

Commodities stabilize

The decline in the dollar has helped underpin commodity prices since the beginning of the year.

While select agricultural commodities have seen price increases, others, such as oil, have been under pressure amid persistent oversupply and subdued demand expectations.

Gold has been a big winner this year amid financial market and geopolitical uncertainty and the decline in the dollar. Additionally, central bank purchases of the shiny metal have also supported demand.

Source: St. Louis Federal Reserve, Trading Economics, MarketWatch

Stockpiling of imports dents Q1 GDP

GDP declined in the first quarter amid a record surge in imports.

GDP, or Gross Domestic Product, is just that—domestic. If imports surge, the rise in imported goods will detract from GDP.

As the year began, importers stockpiled goods in anticipation of higher tariffs. The process has begun to unwind, and GDP is likely to be artificially higher in the second quarter, as it was artificially depressed in Q1.

Data source: St. Louis Federal Reserve*Chained 2017 dollars

Steady job growth

Employment growth has moderated this year but has generally topped investor expectations amid an expanding economy. Meanwhile, layoffs remain fairly low based on first-time claims from unemployment insurance, which is provided weekly by the Department of Labor.

Job openings, which are another gauge of the labor market, are well off the early-decade peak but remain elevated based on historical averages.

Still elevated openings signal that the economy continues to expand, as it reflects employer demand for workers.

Data Source: St. Louis Federal Reserve, U.S. BLS

Data Source: St. Louis Federal Reserve

Inflation eases

There are two important measures of inflation that investors keep tabs on—the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCE Price Index). Both are broad-based. The Fed favors the broader PCE Price Index.

Economists usually prefer core inflation, which excludes food and energy, as their preferred inflation gauge. More often than not, core offers a more accurate picture of underlying trends.

Despite the imposition of new tariffs, core inflation has moderated since the start of the year. Still, many analysts expect inflation to rebound as businesses begin passing through tariff-related costs.

Preemptive stockpiling may have temporarily offset upward price pressures, while fluctuating tariff rates have likely contributed to slower-than-expected price increases.

Businesses may also be reluctant to quickly raise prices, but the extent of the new duties is unparalleled in modern times. Economists expect an impact, but it’s unclear if these will be one-time increases, staggered price hikes, or more persistent price hikes that lead to a secondary round of inflation.

Data Source: St. Louis Federal Reserve