The is a summary of the midyear economic outlook for 2025, discussing market volatility, economic policy impacts, and investment strategies amid ongoing uncertainty.
Economic Environment and Market Volatility
The economic landscape in 2025 is characterized by significant volatility driven by policy changes and trade uncertainties.
Market turbulence is largely due to the unexpected shifts in President Trump’s second-term policies.
Investors must evaluate the economic impact of these policy changes as new data emerges.
The potential for a pivot towards pro-growth policies as the 2026 mid-term elections approach could stabilize the market.
Ongoing uncertainty is expected, but opportunities for investment may arise as volatility recedes.
Economic Outlook for the Second Half
The economy is anticipated to experience slower growth and rising inflation due to delayed trade policy impacts.
Economic growth is expected to decelerate, with weaker labor demand and a slight uptick in inflation.
The Federal Reserve (Fed) will likely maintain a cautious monetary policy stance longer than previously expected.
Stock market performance will be influenced by trade negotiations, AI developments, and interest rate fluctuations.
Bonds are expected to remain range-bound, with Treasury yields influenced by economic weakness and debt concerns.
Labor Market Challenges Ahead
The labor market appears stable but faces potential disruptions that could impact employment trends.
Fed reports indicate lower labor demand, with hiring pauses and staff reductions becoming more common.
Metrics such as the quits rate and hires rate will provide insights into labor market health.
A weakening labor market could lead to lower payroll numbers in the coming months.
Trade Policy Uncertainty’s Economic Impact
Unpredictable trade policies are creating significant risks for American businesses and the overall economy.
Tariff uncertainty is hindering strategic planning and investment, leading to a cautious approach among companies.
The fluidity of tariff policies complicates long-term planning and erodes profit margins.
Ongoing trade policy challenges are expected to drag on economic growth in the latter half of 2025.
Insights from Washington on Policy Priorities
The Trump Administration’s policy focus will influence economic and market conditions in the near future.
Key areas of focus include trade, cybersecurity, and financial services regulation.
Recent court decisions on tariffs could lead to significant changes in trade policy and economic implications.
Congressional actions, including budget reconciliation and AI regulation, will also shape the economic landscape.
Stock Market Performance Expectations
The stock market is expected to see modest gains amid ongoing uncertainty and volatility.
Performance will largely depend on trade policy clarity and the ability to sustain earnings momentum.
Historical data suggests that stocks tend to recover after corrections, but the current environment remains unpredictable.
Earnings growth is anticipated to slow due to tariff impacts, with estimates for S&P 500 earnings per share ranging from $255 to $260 for 2025.
Sector Recommendations for Investment
Strategic sector allocations are recommended to navigate the current economic landscape effectively.
A tilt towards economically sensitive sectors like Financials and Communication Services is advised.
Financials are seen as attractively valued with manageable tariff risks, while Communication Services may benefit from AI investments.
Caution is advised in Materials and Utilities due to waning earnings momentum and slowing global growth.
Favorable Trade and Sector Outlook
In a positive trade and tariff scenario, industrials and certain healthcare segments are expected to perform well.
Industrials are likely to outperform in favorable trade conditions.
Defensive sectors, particularly biotech and medical equipment within healthcare, may present attractive opportunities in the latter half of the year.
The overall sector outlook includes an overweight position in Communication Services and Financials, while Materials and Utilities are underweight.
The Jekyll & Hyde Bond Market Dynamics
The bond market is influenced by opposing forces of economic weakness and fiscal concerns, leading to elevated yields.
Yields are expected to remain high due to growing debt concerns, increased Treasury issuance, and inflation risks.
The 10-year Treasury yield is projected to settle between 4.0% and 4.5% by year-end.
The bond market is characterized by a struggle between lower rates from economic weakness (Dr. Jekyll) and higher rates from fiscal concerns (Mr. Hyde).
Credit spreads are below long-term averages, indicating performance will largely depend on Treasury yield movements.
Federal Debt and Deficit Spending Concerns
Rising federal debt and deficit spending are significant factors affecting the bond market.
The U.S. government has $36 trillion in total debt, increasing by approximately $1 trillion every six months.
Deficits are projected to run at 6-7% of GDP, necessitating continued high Treasury issuance.
Net interest payments are expected to rise to nearly 25% of federal outlays by 2054.
The bond market faces pressure from increased supply and potential waning foreign demand for U.S. Treasuries.
Foreign Demand and Treasury Yield Curve
Foreign investor demand for U.S. Treasuries is declining amid rising global yields.
Long-term interest rates have surged globally, making non-U.S. markets more attractive.
Foreign ownership of U.S. Treasuries is around 30%, but rising home-market yields may deter investment.
The Treasury yield curve remains relatively flat, with a 2Y/10Y spread of only +0.48%, suggesting potential for further steepening.
Economic Weakness Could Lower Rates
Economic data indicating weakness could lead to lower Treasury yields.
A significant economic slowdown could prompt the Fed to cut rates more than currently anticipated.
The 10-year Treasury yield is highly correlated with the expected trough in the fed funds rate.
If labor market conditions weaken or geopolitical events arise, Treasury yields may decline significantly.
Commodity Market Outlook and Trends
The commodity market is experiencing mixed results amid various macroeconomic factors.
A weaker dollar and signs of economic recovery in China could catalyze a broader commodity rally.
Gold prices have increased over 20% through May, driven by central bank demand and geopolitical tensions.
Industrial metals are struggling due to trade policy uncertainty, while copper demand is bolstered by data center growth.
U.S. Dollar Status and Future Outlook
The U.S. dollar remains the world’s reserve currency, but faces risks of prolonged weakness.
The U.S. Dollar Index (DXY) has lost 8.4% in the first five months of the year.
Despite downside risks, there are no viable alternatives to the dollar as a reserve currency.
The dollar’s involvement in global transactions is approximately 50%, with the euro at 22%.
Cryptocurrency Developments and Regulatory Focus
The cryptocurrency market is evolving with ongoing regulatory initiatives under the current administration.
Bitcoin remains in a long-term uptrend, but momentum has slowed amid policy uncertainty.
The administration is promoting cryptocurrency adoption, appointing a Crypto Czar to oversee integration.
Stablecoin regulation is a focus, with potential implications for the U.S. position in the crypto market.
Summary of Tactical Views for 2025
The investment committee outlines strategic asset allocation amid current market conditions.
U.S. equities are downgraded to neutral due to trade policy uncertainty and geopolitical risks.
Fixed income offers attractive income opportunities, with a focus on coupon clipping.
Alternative investments are favored for enhancing portfolio stability during volatility.
Emerging market equities are upgraded to neutral, benefiting from a potentially weaker dollar.
Volatility, as defined by Merriam-Webster, is “a tendency to change quickly and unpredictably” — a fitting description of the 2025 environment. The volatility has stemmed from assuming President Trump’s second term policies would mirror his first, as well as the subsequent impact of those new policy directions. As more hard data becomes available, we will all need to carefully evaluate the true economic impact of these policy shifts — plus consider the possibility the administration may pivot towards a more pro-market policy as the 2026 mid-term election nears. Given the array of potential outcomes, investors should prepare for ongoing uncertainty and the market volatility that may accompany it. To make sense of such a fluid market environment, we turn to our Strategic & Tactical Asset Allocation Committee (STAAC).
This experienced team of investment professionals, utilizing our data-driven framework, meets weekly to assess global market trends, identify emerging risks, and uncover potential investment opportunities for our investors. With uncertainty expected to persist, the STAAC believes tactical portfolios should seek to carefully balance risk mitigation with proactive positioning for new opportunities. We continue to emphasize the importance of diversification across asset classes and geographic regions — plus favor integrating stability enhancing holdings that do not move in lockstep with traditional assets (e.g., alternative investments). We also advocate staying attentive to periods of volatility to take advantage of attractive levels in equities.
Regardless of what the markets may bring, it is truly a privilege to stand alongside you as a partner, and we sincerely appreciate the confidence you place in LPL Research.
As Americans get their grills and beach chairs ready for the July 4th holiday, the stock market and the weather across much of the country have both been on heaters. Stocks and bonds continue to effectively navigate a complex policy landscape shaped by evolving trade dynamics, geopolitical tensions, and fiscal stimulus. The market’s resilience in the face of these crosscurrents has been impressive, proving yet again that the fundamentals of the U.S. economy and corporate America can withstand a lot.
In a volatile first half, the S&P 500 completed an impressive recovery from the April lows to end June at a fresh record high. The round trip from the February 19 high to the April 2 low and back, in slightly over four months, was one of the fastest recoveries on record from a 10–20% correction. Importantly, history tells us stocks tend to go higher after recovering correction losses, with average gains of 9.6% and 16.2% in the subsequent six and 12 months.
Several factors helped fuel this rally:
Israel-Iran cease-fire and resulting lower oil prices and lower interest rates
Progress on trade deals and, so far, little evidence of tariff-driven inflation
Stimulus from the pending tax cuts and spending bill
Firming expectations of Federal Reserve (Fed) rate cuts and related weakness in the U.S. dollar
Resurgence in demand for artificial intelligence (AI) investments
Buying by under-invested institutions trying to keep up with the rally
While history suggests achieving new highs may bode well for the rest of the year, we know stocks don’t go up in a straight line. Several obstacles lie ahead. Perhaps the biggest one is the yet-to-be-felt effects of tariffs on companies’ profit margins. With stock valuations elevated (as they’ve been for a while), earnings will be key to further upside. Potentially higher interest rates from additional deficit spending are another risk to monitor. And as always, geopolitics are a wild card.
We continue to monitor the macroeconomic backdrop, corporate fundamentals, policy developments, and technical indicators to guide our outlook. We believe the foundation for continued economic growth is intact, supported by resilient consumer spending, a healthy job market, modest earnings growth despite tariffs, the likely resumption of Fed rate cuts this fall, and the stimulus from the pending reconciliation bill. Staying invested and well-diversified while looking for opportunities to potentially add equities on weakness remains the prudent approach for this market environment.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of July 2, 2025.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0004769-0625 | For Public Use | Tracking #762634 | #762637 (Exp. 07/2026)
As June begins, markets continue to navigate a complex landscape shaped by trade policy shifts, an uncertain economic and earnings outlook, and bond market headwinds. Several key developments in recent weeks may have implications for markets:
Trade Policy in Flux. The May 28 court ruling blocking most of President Trump’s tariffs has introduced some additional uncertainty for investors. The administration has other legal avenues to pursue if needed and will likely be able to maintain tariffs at levels consistent with prior expectations. Rising tensions with China surrounding critical mineral exports and Taiwan in recent days serve as a reminder for investors that geopolitical risk remains elevated.
Solid Earnings Results, But Caution Ahead. First quarter earnings season delivered broadly positive results, with nearly 80% of companies exceeding analysts’ expectations. Mega-cap technology companies (the so-called Magnificent Seven) drove nearly half of the 13% S&P 500 earnings per share growth. While the results were strong, they may not be enough to sustain the recent market rally given limited visibility into the economic and profit backdrop for the second half of the year.
Stock Valuations May Reflect Too Much Optimism. Markets continue to price in limited impact from tariffs, highlighting the fragility of the latest rally. That doesn’t mean the broad market can’t reach new highs this year, but it will likely take some pleasant surprises to help overcome tariff-driven pressures on inflation and profit margins. It would help investor sentiment if trade uncertainty cleared up so the focus could shift toward the tax bill currently in Congress. Whatever your view is on tariffs, there is no doubt that tariff revenue — if preserved — will be helpful in getting the 2017 tax cuts extended.
Bond Market Headwinds Persist. The Treasury market is facing several headwinds. The prospects of tariff-driven inflation, our lack of fiscal restraint, reduced demand from foreign buyers, higher non-U.S. yields, and a resilient U.S. economy are just some of the factors putting upward pressure on yields. Ultimately, Treasury yields are primarily a function of growth and inflation expectations, so until the economic data softens, Treasury market volatility is probably here to stay.
As we move further into the summer months, key catalysts to watch include inflation data, further developments in trade negotiations, central bank commentary, and progress on the tax bill. Meanwhile, corporate America’s sales and profit margins will garner increasing support from artificial intelligence in the quarters and years ahead. We encourage long-term investors to watch for opportunities to add equities on dips, though periodic bouts of market volatility are to be expected until there is greater clarity on trade.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of June 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0004481-0525 | For Public Use | Tracking #749000 | #749001 (Exp. 06/2026)
The latest recovery is another reminder that periods of turmoil can often create opportunities. Although stocks may pull back after their strong rally since the April 8 lows — especially if trade deals and tariff reductions don’t materialize soon — the lesson is clear: in our view, staying the course during downturns is almost always the best strategy.
Several factors are at play in the market’s recent recovery:
Optimism about trade and tariffs. The White House has signaled progress on deals with several countries, including India, South Korea, Japan, and the U.K. President Trump has also hinted at reductions in China’s tariffs, while Treasury Secretary Scott Bessent will meet with senior Chinese trade officials in Switzerland this week.
Resilient economic fundamentals. The U.S. economy added 177,000 new jobs in April, keeping unemployment low at 4.2%. Consumer spending grew 1.8% in inflation-adjusted terms in the first quarter, while business investment surged over 20% annually — bright spots that were overshadowed by concerns about the 0.3% dip in gross domestic product (GDP) caused by surging pre-tariff imports. A rebound in second-quarter GDP should prevent consecutive quarters of contraction.
Easing inflation delayed but still coming. While tariffs may slow further improvement, we and the markets expect inflation to resume its downward trend toward the Federal Reserve’s (Fed) 2% target by 2026. Falling oil prices and declining long-term Treasury yields since January are also helping.
Strong corporate profits. S&P 500 firms are on track for over 13% first-quarter earnings growth, roughly double expectations when earnings season began. Leading technology companies have reaffirmed or increased capital spending plans despite trade uncertainty, committing to a more than 30% increase in 2025 over 2024, underpinned by confidence in the potential payoffs of artificial intelligence.
Looking ahead, stocks may need a bit of a breather after making up so much ground quickly. Stagflation risks cannot be dismissed as growth slows and tariffs loom. While the U.S. economy and corporate America remain in excellent shape, we suggest investors maintain exposure to equities and fixed income in line with long-term targets. Better entry points to add equities may present themselves with trade uncertainty still very high.
Despite periodic short-term disruptions, markets are inherently resilient. History shows they may recover regardless of the threat. Stocks tend to reward disciplined, long-term investors. Few exemplify this discipline better than Warren Buffett, who stepped down as CEO of Berkshire Hathaway (BRK/A) this week after 60 years in that seat (he remains Chairman). His track record — 16% annualized return for BRK/A since November 1987 compared to 10.9% for the S&P 500 — will be tough to beat. We wish him well in his “retirement” at the age of 94.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of May 7, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0004067-0425 | For Public Use | Tracking #7356571 | #735672 (Exp. 05/2026)
April showers came a month early as stocks fell in March. Tariffs were the primary cause of the market jitters, although that uncertainty became too much for markets to shrug off once economic data started to weaken.
The U.S. economy had been poised to slow from last year’s pace near 3% even before the Trump administration announced new tariffs. After the weak retail sales numbers for both January and February, LPL Research reduced its growth estimate from 1.9% to 1.7% with downside risks from potential trade wars if countries retaliate. The odds of recession over the next year or so are probably about 30% as tariffs weigh on economic activity.
Companies must pay some of these levies, compressing profit margins. Some of those costs will be passed on to inflation-weary consumers in the form of higher prices. Some consumers may pull purchases forward ahead of tariffs to avoid price hikes, but others are delaying spending due to the uncertainty, weighing on the economic growth. Falling stock prices and mounting federal government layoffs are adding to consumers’ angst. It’s also difficult for companies to commit to capital projects and hiring while they sort through tariff effects.
On a more positive note, consumers have the benefit of healthy savings, years of solid income growth, and accumulated net wealth to keep the economy growing this year. Slower growth is putting downward pressure on inflation, offsetting tariff effects, and paving the way for more rate cuts from the Federal Reserve. That should help keep borrowing rates contained. Corporate America remains in excellent shape and is positioned for solid earnings growth even with a tripling or more of average U.S. tariff rates.
We may be at peak trade uncertainty right now. Stocks don’t like uncertainty, but they tend to rally once it starts to clear. We saw that during the trade war period of 2019 under Trump 1.0. From August 23, 2019, through the pre-pandemic highs on February 19, 2020, the S&P 500 index rallied 19%. That may be too much to ask over the next six months, but a double-digit rally from current levels through yearend seems attainable. The “spinach” of tariffs comes first, but it will be followed by the “candy” of tax cut extensions and deregulation later. A positive year for stocks remains well within reach.
While the broad U.S. stock market may have fallen during the first quarter, U.S. value and broad international stocks rose based on Russell and MSCI benchmarks. Seven of the 11 S&P equity sectors produced positive returns. And bonds were higher, reminding investors of the benefits of diversification.
Volatility may stay with us for a while as the policy fog continues to clear. Annual returns have historically been muted after first quarter losses. But negative sentiment suggests a durable low may be close. Expect more ups than downs for stocks in the months ahead.
As always, please reach out to me with questions.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of April 1, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0003763 | For Public Use | Tracking # 717506 | # 717509
As spring approaches and the weather warms, the U.S. economy has begun to cool. After a sizzling recovery from the pandemic, followed by a period of surprisingly solid and steady growth on the back of resilient consumer spending, the economy finally seems poised to downshift to its pre-pandemic trend near 2% growth. Recent confidence surveys suggest consumers may pull back some and jobs are a bit tougher to get. But consumers remain in good shape financially overall — particularly upper-income folks who drive most of the spending. In fact, the top 10% of income earners are now responsible for about half of all spending.
Slower growth may be good for stocks because it helps ease some of the inflation pressure and can pave the way for more Federal Reserve (Fed) rate cuts. We’re talking about a slight cooldown, not a collapse. Reaccelerating inflation is probably a bigger risk than recession, even after weak economic data last month. We’ll take our chances with a gradual slowdown from last year’s unsustainable pace near 3% growth.
Slower growth and easing inflation pressure will keep Fed rate cuts in play and prevent big up moves in interest rates that could weigh on stock and bond returns. With bond yields down this year but still attractive, 2025 is shaping up to be a good year for fixed income investors. Although stocks are off to a slow start on tariff concerns, cooling inflation and stable yields are key ingredients for the bull case.
Another key ingredient for the bull case for stocks is strong earnings. Corporate America delivered in the fourth quarter, as S&P 500 companies grew earnings per share by over 18% year over year. Although strategists’ expectations for double-digit earnings growth in 2025 may be too high, especially if tariffs stick and prompt more retaliation, the earnings outlook is good enough to support stock gains.
This year has brought new stock market leadership. The average “Magnificent Seven” stock — the largest seven technology companies — has fallen about 9% so far this year, while the average S&P 500 stock is up slightly. As some doubt the staying power of the artificial intelligence-fueled rally in the big tech stocks, others are finding opportunities rotating to other areas — the normal evolution of a maturing bull market.
Tariffs remain a near-term threat. Although exceptions, reductions, delays, or complete reversals may come, some tariffs will stick. Retaliation by trading partners will likely weigh on U.S. economic growth. Prices on some items will rise, as foreign producers and currency adjustments can only absorb so much, making the Fed’s job tougher. Expect some impact on importers’ profits in certain industries, such as autos, food and beverages, and certain segments of retail. But don’t expect tariffs to derail corporate America’s AI-driven earnings gains.
Expect a positive year for stocks on the back of steady growth in corporate profits, but likely with more bumps along the way as the economy slows and policy uncertainty remains elevated.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of March 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value
RES-0003082-0225 | For Public Use | Tracking #704746 | #704747 (Exp. 03/2026)
The new month brings two major market-moving stories to digest. First is the advances in artificial intelligence (AI) by Chinese startup DeepSeek. It has caused some investors to question America’s lead in the AI race and American Exceptionalism more broadly. To answer that question, it’s important to look at this idea holistically. U.S. advantages in research and development spending, capital markets depth, the dollar’s privilege as the global reserve currency, and more suggest U.S. exceptionalism will remain intact.
Impending tariffs on our three biggest trading partners are also among the news ushered in with the new month. As you digest this news and markets react, we would like you to keep several things in mind. First, we believe the Trump administration is using tariffs mostly as a negotiation tactic with Canada and Mexico, creating leverage for working on issues like border security and drug trafficking.
Any tariffs implemented in these countries will likely not persist, especially since President Trump does not want higher inflation or sharp stock market declines. While the size and duration of tariffs remains uncertain, feedback from inflation data and market fluctuations should help mitigate potential negative impact. Lasting and higher tariffs are more likely in China, making the path forward for the Chinese economy and the China-heavy emerging market indexes potentially bumpy.
The economic impact of tariffs on consumer prices for most products will likely be manageable, as some costs are absorbed by currency fluctuations, our trading partners, and the companies themselves. Meanwhile, consumers will find substitutes for some products, lessening the blow. So, while inflation readings may tick higher in the short term and companies will experience some margin pressures, the economy should cool enough to keep Federal Reserve (Fed) rate increases off the table and bond yields in check.
As the AI and tariff headlines swirl, don’t forget that stock market fundamentals remain healthy. Steady economic growth, double-digit increases in S&P 500 profits, contained inflation, and likely additional rate cuts by the Fed later this year are a good mix for higher stock prices. The S&P 500 rose in January, which history suggests is an effective barometer for stock prices over the balance of the year. Expect a profitable year for stock investors in 2025 but be ready for some more ups and downs.
As always, please reach out to me with questions.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of February 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0002855-0125 | For Public Use | Tracking # 692354 | # 692461 (Exp. 02/2026)
Stocks had another very strong year in 2024. In fact, 2024 marked the first time the S&P 500 has enjoyed a +20% gain in back-to-back years since 1997–98. Last year didn’t start out so optimistically though. The list of worries among stock-market bears included high valuations, narrow leadership by the largest technology stocks, rising long-term interest rates, election uncertainty, deficit spending, and more. Stocks rallied through all of that without so much as one 10% correction.
The stock market’s surprising ascent in 2024 offers some important lessons for investors:
The herd is often wrong. Wall Street underestimated the S&P 500’s price at year-end by about 15%. Remember, positive years for stocks are about three times more likely than declines.
The trend is your friend. Employing technical analysis can help investors avoid mistakes. In an upward-trending market, don’t take a detour because of some bearish narrative the market may not care about.
Bull markets typically run for a while. They last more than five years on average and rarely end when the U.S. economy is growing, especially when the Federal Reserve (Fed) is cutting interest rates. The current bull market is about 27 months old.
Earnings drive stock prices. The fundamental value of stocks comes from a company’s earnings. S&P 500 companies will likely grow earnings 10% in aggregate in 2024 and may do so again in 2025.
Focus on the long term. Don’t get scared out of the market by the headlines if you’re a long-term investor. “Time in the market” beats “timing the market.” Waiting it out through down periods is the best approach for nearly all investors. Since 1980, the annualized return for the S&P 500 is 12.1%.
The U.S. economy also offered investors another lesson — that betting against the U.S. consumer is often a losing bet — especially an employed U.S. consumer. Mortgage refinances during the pandemic and the wealth created by higher stock prices added fuel for more spending, particularly from upper-income consumers.
These are good lessons to tuck away as 2025 gets underway. The coming year may not bring quite as much joy to your portfolio as 2024, given how much good news is being priced into the stock market currently. Inflation pressures may re-emerge, and geopolitical threats could upend rallies. But, with steady economic growth, a healthy job market, growing corporate profits, and continued investment in artificial intelligence, the ingredients for another profitable year are in place.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of January 7, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0002685-1124 | For Public Use | Tracking # 679144 | # 679391 (Exp. 01/2026)
Solid gains for stocks gave investors a November to remember. In fact, the S&P 500’s more than 5% advance marked its best month of 2024. Several factors played into the stock market’s continued move higher. The U.S. economy continued its steady run of solid growth. The Federal Reserve (Fed) cut interest rates as expected, providing some reassurance about the outlook for inflation. Third quarter earnings season was solid, revealing that corporate America still has double-digit earnings power in its bag of tricks. The combination of election clarity and prospects for deregulation and lower taxes from the incoming administration also played a role. Market leadership was also encouraging, as small caps and economically sensitive consumer discretionary and financial sectors led, which may bode well for further gains.
More good news for markets came over the Thanksgiving holiday weekend with promising data for the all-important start to the holiday shopping season. According to Mastercard’s SpendingPulse (which measures both online and in-store retail sales), sales rose a solid 3.4% on Black Friday, compared to 2023 levels, driven by a more than 14% increase in online sales. Consumers broadly are still enjoying plenty of spending power thanks to rising wages, low unemployment, and high stock prices – especially those who refinanced mortgages during the pandemic. Add in the recent dip in gas prices and it’s likely the shopping momentum will continue through year end.
Looking ahead, more gains could be coming. History reveals that stocks tend to produce above-average gains in December and rise more often than they fall — even after strong gains the month prior. In 2025, continued economic and earnings growth, lower inflation, and potentially more Fed rate cuts position the stock market for further gains. If artificial intelligence investments boost productivity, as many expect, a good year could get even better.
Of course, there are risks. The last bit of excess inflation has been tough to wring out, so markets may need to further reduce expectations for rate cuts. Deficit spending could put upward pressure on long-term interest rates. Tariffs will likely trim company profit margins and be met with additional retaliation. Geopolitical threats cannot be dismissed even after a temporary cease-fire between Hezbollah and Israel and talks of a territory-for-peace deal in Ukraine. Finally, some measures of investor sentiment are getting stretched, so fully allocated investors may want to wait for a dip before adding to equity positions.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of December 3, 2024.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
Not Bank/Credit Union Guaranteed
Not Bank/Credit Union Deposits or Obligations
MayLose Value
RES-0002561-1124W | For Public Use | Tracking # 666592 | # 666617(Exp. 12/2025)
2025 Midyear Outlook
Client LettersSummary of the 2025 Midyear Outlook
Read the full document here
The is a summary of the midyear economic outlook for 2025, discussing market volatility, economic policy impacts, and investment strategies amid ongoing uncertainty.
Economic Environment and Market Volatility
The economic landscape in 2025 is characterized by significant volatility driven by policy changes and trade uncertainties.
Economic Outlook for the Second Half
The economy is anticipated to experience slower growth and rising inflation due to delayed trade policy impacts.
Labor Market Challenges Ahead
The labor market appears stable but faces potential disruptions that could impact employment trends.
Trade Policy Uncertainty’s Economic Impact
Unpredictable trade policies are creating significant risks for American businesses and the overall economy.
Insights from Washington on Policy Priorities
The Trump Administration’s policy focus will influence economic and market conditions in the near future.
Stock Market Performance Expectations
The stock market is expected to see modest gains amid ongoing uncertainty and volatility.
Sector Recommendations for Investment
Strategic sector allocations are recommended to navigate the current economic landscape effectively.
Favorable Trade and Sector Outlook
In a positive trade and tariff scenario, industrials and certain healthcare segments are expected to perform well.
The Jekyll & Hyde Bond Market Dynamics
The bond market is influenced by opposing forces of economic weakness and fiscal concerns, leading to elevated yields.
Federal Debt and Deficit Spending Concerns
Rising federal debt and deficit spending are significant factors affecting the bond market.
Foreign Demand and Treasury Yield Curve
Foreign investor demand for U.S. Treasuries is declining amid rising global yields.
Economic Weakness Could Lower Rates
Economic data indicating weakness could lead to lower Treasury yields.
Commodity Market Outlook and Trends
The commodity market is experiencing mixed results amid various macroeconomic factors.
U.S. Dollar Status and Future Outlook
The U.S. dollar remains the world’s reserve currency, but faces risks of prolonged weakness.
Cryptocurrency Developments and Regulatory Focus
The cryptocurrency market is evolving with ongoing regulatory initiatives under the current administration.
Summary of Tactical Views for 2025
The investment committee outlines strategic asset allocation amid current market conditions.
2025 Midyear Outlook Executive Overview
Client LettersOverview
Volatility, as defined by Merriam-Webster, is “a tendency to change quickly and unpredictably” — a fitting description of the 2025 environment. The volatility has stemmed from assuming President Trump’s second term policies would mirror his first, as well as the subsequent impact of those new policy directions. As more hard data becomes available, we will all need to carefully evaluate the true economic impact of these policy shifts — plus consider the possibility the administration may pivot towards a more pro-market policy as the 2026 mid-term election nears. Given the array of potential outcomes, investors should prepare for ongoing uncertainty and the market volatility that may accompany it. To make sense of such a fluid market environment, we turn to our Strategic & Tactical Asset Allocation Committee (STAAC).
This experienced team of investment professionals, utilizing our data-driven framework, meets weekly to assess global market trends, identify emerging risks, and uncover potential investment opportunities for our investors. With uncertainty expected to persist, the STAAC believes tactical portfolios should seek to carefully balance risk mitigation with proactive positioning for new opportunities. We continue to emphasize the importance of diversification across asset classes and geographic regions — plus favor integrating stability enhancing holdings that do not move in lockstep with traditional assets (e.g., alternative investments). We also advocate staying attentive to periods of volatility to take advantage of attractive levels in equities.
Regardless of what the markets may bring, it is truly a privilege to stand alongside you as a partner, and we sincerely appreciate the confidence you place in LPL Research.
Read the full Executive Summary here.
Read the full 2025 Midyear Outlook here.
JULY 2025 CLIENT LETTER
Client LettersJuly 2, 2025
Dear Valued Investor,
As Americans get their grills and beach chairs ready for the July 4th holiday, the stock market and the weather across much of the country have both been on heaters. Stocks and bonds continue to effectively navigate a complex policy landscape shaped by evolving trade dynamics, geopolitical tensions, and fiscal stimulus. The market’s resilience in the face of these crosscurrents has been impressive, proving yet again that the fundamentals of the U.S. economy and corporate America can withstand a lot.
In a volatile first half, the S&P 500 completed an impressive recovery from the April lows to end June at a fresh record high. The round trip from the February 19 high to the April 2 low and back, in slightly over four months, was one of the fastest recoveries on record from a 10–20% correction. Importantly, history tells us stocks tend to go higher after recovering correction losses, with average gains of 9.6% and 16.2% in the subsequent six and 12 months.
Several factors helped fuel this rally:
While history suggests achieving new highs may bode well for the rest of the year, we know stocks don’t go up in a straight line. Several obstacles lie ahead. Perhaps the biggest one is the yet-to-be-felt effects of tariffs on companies’ profit margins. With stock valuations elevated (as they’ve been for a while), earnings will be key to further upside. Potentially higher interest rates from additional deficit spending are another risk to monitor. And as always, geopolitics are a wild card.
We continue to monitor the macroeconomic backdrop, corporate fundamentals, policy developments, and technical indicators to guide our outlook. We believe the foundation for continued economic growth is intact, supported by resilient consumer spending, a healthy job market, modest earnings growth despite tariffs, the likely resumption of Fed rate cuts this fall, and the stimulus from the pending reconciliation bill. Staying invested and well-diversified while looking for opportunities to potentially add equities on weakness remains the prudent approach for this market environment.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of July 2, 2025.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0004769-0625 | For Public Use | Tracking #762634 | #762637 (Exp. 07/2026)
JUNE 2025 CLIENT LETTER
Client LettersJune 4, 2025
Dear Valued Investor,
As June begins, markets continue to navigate a complex landscape shaped by trade policy shifts, an uncertain economic and earnings outlook, and bond market headwinds. Several key developments in recent weeks may have implications for markets:
As we move further into the summer months, key catalysts to watch include inflation data, further developments in trade negotiations, central bank commentary, and progress on the tax bill. Meanwhile, corporate America’s sales and profit margins will garner increasing support from artificial intelligence in the quarters and years ahead. We encourage long-term investors to watch for opportunities to add equities on dips, though periodic bouts of market volatility are to be expected until there is greater clarity on trade.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of June 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency
May Lose Value
RES-0004481-0525 | For Public Use | Tracking #749000 | #749001 (Exp. 06/2026)
MAY 2025 CLIENT LETTER
Client LettersMay 7, 2025
Dear Valued Investor,
The latest recovery is another reminder that periods of turmoil can often create opportunities. Although stocks may pull back after their strong rally since the April 8 lows — especially if trade deals and tariff reductions don’t materialize soon — the lesson is clear: in our view, staying the course during downturns is almost always the best strategy.
Several factors are at play in the market’s recent recovery:
Looking ahead, stocks may need a bit of a breather after making up so much ground quickly. Stagflation risks cannot be dismissed as growth slows and tariffs loom. While the U.S. economy and corporate America remain in excellent shape, we suggest investors maintain exposure to equities and fixed income in line with long-term targets. Better entry points to add equities may present themselves with trade uncertainty still very high.
Despite periodic short-term disruptions, markets are inherently resilient. History shows they may recover regardless of the threat. Stocks tend to reward disciplined, long-term investors. Few exemplify this discipline better than Warren Buffett, who stepped down as CEO of Berkshire Hathaway (BRK/A) this week after 60 years in that seat (he remains Chairman). His track record — 16% annualized return for BRK/A since November 1987 compared to 10.9% for the S&P 500 — will be tough to beat. We wish him well in his “retirement” at the age of 94.
Thank you for your continued trust.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of May 7, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0004067-0425 | For Public Use | Tracking #7356571 | #735672 (Exp. 05/2026)
APRIL 2025 CLIENT LETTER
Client LettersApril 2, 2025
Dear Valued Investor,
April showers came a month early as stocks fell in March. Tariffs were the primary cause of the market jitters, although that uncertainty became too much for markets to shrug off once economic data started to weaken.
The U.S. economy had been poised to slow from last year’s pace near 3% even before the Trump administration announced new tariffs. After the weak retail sales numbers for both January and February, LPL Research reduced its growth estimate from 1.9% to 1.7% with downside risks from potential trade wars if countries retaliate. The odds of recession over the next year or so are probably about 30% as tariffs weigh on economic activity.
Companies must pay some of these levies, compressing profit margins. Some of those costs will be passed on to inflation-weary consumers in the form of higher prices. Some consumers may pull purchases forward ahead of tariffs to avoid price hikes, but others are delaying spending due to the uncertainty, weighing on the economic growth. Falling stock prices and mounting federal government layoffs are adding to consumers’ angst. It’s also difficult for companies to commit to capital projects and hiring while they sort through tariff effects.
On a more positive note, consumers have the benefit of healthy savings, years of solid income growth, and accumulated net wealth to keep the economy growing this year. Slower growth is putting downward pressure on inflation, offsetting tariff effects, and paving the way for more rate cuts from the Federal Reserve. That should help keep borrowing rates contained. Corporate America remains in excellent shape and is positioned for solid earnings growth even with a tripling or more of average U.S. tariff rates.
We may be at peak trade uncertainty right now. Stocks don’t like uncertainty, but they tend to rally once it starts to clear. We saw that during the trade war period of 2019 under Trump 1.0. From August 23, 2019, through the pre-pandemic highs on February 19, 2020, the S&P 500 index rallied 19%. That may be too much to ask over the next six months, but a double-digit rally from current levels through yearend seems attainable. The “spinach” of tariffs comes first, but it will be followed by the “candy” of tax cut extensions and deregulation later. A positive year for stocks remains well within reach.
While the broad U.S. stock market may have fallen during the first quarter, U.S. value and broad international stocks rose based on Russell and MSCI benchmarks. Seven of the 11 S&P equity sectors produced positive returns. And bonds were higher, reminding investors of the benefits of diversification.
Volatility may stay with us for a while as the policy fog continues to clear. Annual returns have historically been muted after first quarter losses. But negative sentiment suggests a durable low may be close. Expect more ups than downs for stocks in the months ahead.
As always, please reach out to me with questions.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of April 1, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0003763 | For Public Use | Tracking # 717506 | # 717509
MARCH 2025 CLIENT LETTER
Client LettersMarch 5, 2025
Dear Valued Investor,
As spring approaches and the weather warms, the U.S. economy has begun to cool. After a sizzling recovery from the pandemic, followed by a period of surprisingly solid and steady growth on the back of resilient consumer spending, the economy finally seems poised to downshift to its pre-pandemic trend near 2% growth. Recent confidence surveys suggest consumers may pull back some and jobs are a bit tougher to get. But consumers remain in good shape financially overall — particularly upper-income folks who drive most of the spending. In fact, the top 10% of income earners are now responsible for about half of all spending.
Slower growth may be good for stocks because it helps ease some of the inflation pressure and can pave the way for more Federal Reserve (Fed) rate cuts. We’re talking about a slight cooldown, not a collapse. Reaccelerating inflation is probably a bigger risk than recession, even after weak economic data last month. We’ll take our chances with a gradual slowdown from last year’s unsustainable pace near 3% growth.
Slower growth and easing inflation pressure will keep Fed rate cuts in play and prevent big up moves in interest rates that could weigh on stock and bond returns. With bond yields down this year but still attractive, 2025 is shaping up to be a good year for fixed income investors. Although stocks are off to a slow start on tariff concerns, cooling inflation and stable yields are key ingredients for the bull case.
Another key ingredient for the bull case for stocks is strong earnings. Corporate America delivered in the fourth quarter, as S&P 500 companies grew earnings per share by over 18% year over year. Although strategists’ expectations for double-digit earnings growth in 2025 may be too high, especially if tariffs stick and prompt more retaliation, the earnings outlook is good enough to support stock gains.
This year has brought new stock market leadership. The average “Magnificent Seven” stock — the largest seven technology companies — has fallen about 9% so far this year, while the average S&P 500 stock is up slightly. As some doubt the staying power of the artificial intelligence-fueled rally in the big tech stocks, others are finding opportunities rotating to other areas — the normal evolution of a maturing bull market.
Tariffs remain a near-term threat. Although exceptions, reductions, delays, or complete reversals may come, some tariffs will stick. Retaliation by trading partners will likely weigh on U.S. economic growth. Prices on some items will rise, as foreign producers and currency adjustments can only absorb so much, making the Fed’s job tougher. Expect some impact on importers’ profits in certain industries, such as autos, food and beverages, and certain segments of retail. But don’t expect tariffs to derail corporate America’s AI-driven earnings gains.
Expect a positive year for stocks on the back of steady growth in corporate profits, but likely with more bumps along the way as the economy slows and policy uncertainty remains elevated.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of March 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value
RES-0003082-0225 | For Public Use | Tracking #704746 | #704747 (Exp. 03/2026)
FEBRUARY 2025 CLIENT LETTER
Client LettersFebruary 5, 2025
Dear Valued Investor,
The new month brings two major market-moving stories to digest. First is the advances in artificial intelligence (AI) by Chinese startup DeepSeek. It has caused some investors to question America’s lead in the AI race and American Exceptionalism more broadly. To answer that question, it’s important to look at this idea holistically. U.S. advantages in research and development spending, capital markets depth, the dollar’s privilege as the global reserve currency, and more suggest U.S. exceptionalism will remain intact.
Impending tariffs on our three biggest trading partners are also among the news ushered in with the new month. As you digest this news and markets react, we would like you to keep several things in mind. First, we believe the Trump administration is using tariffs mostly as a negotiation tactic with Canada and Mexico, creating leverage for working on issues like border security and drug trafficking.
Any tariffs implemented in these countries will likely not persist, especially since President Trump does not want higher inflation or sharp stock market declines. While the size and duration of tariffs remains uncertain, feedback from inflation data and market fluctuations should help mitigate potential negative impact. Lasting and higher tariffs are more likely in China, making the path forward for the Chinese economy and the China-heavy emerging market indexes potentially bumpy.
The economic impact of tariffs on consumer prices for most products will likely be manageable, as some costs are absorbed by currency fluctuations, our trading partners, and the companies themselves. Meanwhile, consumers will find substitutes for some products, lessening the blow. So, while inflation readings may tick higher in the short term and companies will experience some margin pressures, the economy should cool enough to keep Federal Reserve (Fed) rate increases off the table and bond yields in check.
As the AI and tariff headlines swirl, don’t forget that stock market fundamentals remain healthy. Steady economic growth, double-digit increases in S&P 500 profits, contained inflation, and likely additional rate cuts by the Fed later this year are a good mix for higher stock prices. The S&P 500 rose in January, which history suggests is an effective barometer for stock prices over the balance of the year. Expect a profitable year for stock investors in 2025 but be ready for some more ups and downs.
As always, please reach out to me with questions.
Sincerely,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of February 4, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0002855-0125 | For Public Use | Tracking # 692354 | # 692461 (Exp. 02/2026)
JANUARY 2025 CLIENT LETTER
Client LettersJanuary 8, 2025
Dear Valued Investor,
Stocks had another very strong year in 2024. In fact, 2024 marked the first time the S&P 500 has enjoyed a +20% gain in back-to-back years since 1997–98. Last year didn’t start out so optimistically though. The list of worries among stock-market bears included high valuations, narrow leadership by the largest technology stocks, rising long-term interest rates, election uncertainty, deficit spending, and more. Stocks rallied through all of that without so much as one 10% correction.
The stock market’s surprising ascent in 2024 offers some important lessons for investors:
The U.S. economy also offered investors another lesson — that betting against the U.S. consumer is often a losing bet — especially an employed U.S. consumer. Mortgage refinances during the pandemic and the wealth created by higher stock prices added fuel for more spending, particularly from upper-income consumers.
These are good lessons to tuck away as 2025 gets underway. The coming year may not bring quite as much joy to your portfolio as 2024, given how much good news is being priced into the stock market currently. Inflation pressures may re-emerge, and geopolitical threats could upend rallies. But, with steady economic growth, a healthy job market, growing corporate profits, and continued investment in artificial intelligence, the ingredients for another profitable year are in place.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of January 7, 2025.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0002685-1124 | For Public Use | Tracking # 679144 | # 679391 (Exp. 01/2026)
December 2024 Client Letter
Client LettersDecember 4, 2024
Dear Valued Investor,
Solid gains for stocks gave investors a November to remember. In fact, the S&P 500’s more than 5% advance marked its best month of 2024. Several factors played into the stock market’s continued move higher. The U.S. economy continued its steady run of solid growth. The Federal Reserve (Fed) cut interest rates as expected, providing some reassurance about the outlook for inflation. Third quarter earnings season was solid, revealing that corporate America still has double-digit earnings power in its bag of tricks. The combination of election clarity and prospects for deregulation and lower taxes from the incoming administration also played a role. Market leadership was also encouraging, as small caps and economically sensitive consumer discretionary and financial sectors led, which may bode well for further gains.
More good news for markets came over the Thanksgiving holiday weekend with promising data for the all-important start to the holiday shopping season. According to Mastercard’s SpendingPulse (which measures both online and in-store retail sales), sales rose a solid 3.4% on Black Friday, compared to 2023 levels, driven by a more than 14% increase in online sales. Consumers broadly are still enjoying plenty of spending power thanks to rising wages, low unemployment, and high stock prices – especially those who refinanced mortgages during the pandemic. Add in the recent dip in gas prices and it’s likely the shopping momentum will continue through year end.
Looking ahead, more gains could be coming. History reveals that stocks tend to produce above-average gains in December and rise more often than they fall — even after strong gains the month prior. In 2025, continued economic and earnings growth, lower inflation, and potentially more Fed rate cuts position the stock market for further gains. If artificial intelligence investments boost productivity, as many expect, a good year could get even better.
Of course, there are risks. The last bit of excess inflation has been tough to wring out, so markets may need to further reduce expectations for rate cuts. Deficit spending could put upward pressure on long-term interest rates. Tariffs will likely trim company profit margins and be met with additional retaliation. Geopolitical threats cannot be dismissed even after a temporary cease-fire between Hezbollah and Israel and talks of a territory-for-peace deal in Ukraine. Finally, some measures of investor sentiment are getting stretched, so fully allocated investors may want to wait for a dip before adding to equity positions.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of December 3, 2024.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This research material was prepared by LPL Financial, LLC.
RES-0002561-1124W | For Public Use | Tracking # 666592 | # 666617 (Exp. 12/2025)