2Q25 Market Insights | Beyond the Numbers

• Markets rose despite mixed economic signals. Stocks posted gains in Q2, with stocks climbing on the back of strong corporate earnings, resilient consumer spending, and ongoing enthusiasm around AI-related investments.

• Inflation has moderated but remains in focus. Inflation data as measured by CPI (Consumer Price Index) has eased to around 2.4% year-over-year, although Core CPI remains stubbornly above the Fed’s 2% target at around 2.8%. Some investors remain cautious that inflation could reaccelerate later in the year as the full effects of recently announced tariffs work through supply chains and consumer prices.

• Bonds showed strength as inflation concerns continue to ease. The exception is municipal bonds, which have seen a surge of new issuance this year—creating a supply/demand imbalance in the short-term.

• Research Highlight: Valuation Gaps Suggest Opportunity Abroad and Down the Cap Spectrum. While U.S. large-cap stocks—especially mega-cap tech—have dominated in recent years, they trade at historically elevated valuations. In contrast, international stocks and U.S. small caps remain meaningfully discounted, both relative to their own history and to U.S. large caps. Over the long run, valuation tends to revert to historical norms. As global economic growth broadens and market leadership rotates, these undervalued areas may offer better long-term return potential and enhance portfolio diversification.
  

2025 Market Performance (Through 6/30/2025)

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