Markets continued to rally in June, capping off a solid quarter for investors. The S&P 500, Dow, and Nasdaq were up for the month and the quarter, supported by the continued cooling of trade war rhetoric. The story was similar internationally, as a solid June contributed to a positive quarter for both developed and emerging market stocks. On the economic front, updates released in June were broadly positive. The May jobs report showed continued solid hiring during the month, and consumer sentiment surged to a four-month high.

As we enter the second half of the year, what can investors expect for the economy and markets? That's the big question we set out to answer in this special Midyear Outlook edition of the Market Observatory. This month, Sam and I are excited to welcome Brad McMillan, chief investment officer, as our special guest.

The first half of the year has left investors with many questions about the path ahead for the economy and markets. Unfortunately, there haven’t been many concrete answers. Tariff announcements and trade negotiations have commanded the room. Then there is the budget bill, which includes tax and spending cuts. It’s also being negotiated at a time when concerns about the country’s deficit have grown, given Moody’s downgrade of the U.S. government’s credit rating. Last but certainly not least, the Fed has yet to lower rates this year.

"I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." — James Carville

I am a firm believer that the market doesn’t like uncertainty. That reality has been seen on more than one occasion in 2025, most notably post-Liberation Day. As discussed in last week’s post, uncertainty hasn’t disappeared—even after the pause in the trade war between the U.S. and China. One of the other investing tenets I believe in is that when things look the bleakest, the market embraces less bad news. And that reality has been evident recently, with the S&P 500 rallying more than 22 percent since the year-to-date low on April 7.

Last week was all about the Fed, while this week we saw developments on tariffs and a de-escalation with China. In the latest episode of the Market Observatory, Sam Millette and I unpack all the hot topics, including how the economy and markets might react to improving headlines.

Last week, I once again had the pleasure of presenting at a Commonwealth conference. As always, our advisors' questions were well thought out, thought-provoking, and covered a lot of ground.

In this month's Market Observatory episode, Sam Millette and I discuss the dominating news story of the year: tariffs and trade policy. Uncertainty has weighed on markets and investors, and the on-again, off-again nature of these policies continues to change the range of outcomes for the economy and corporate earnings.

During periods of market volatility and declines, investors get concerned. They question their long-term objectives and whether they have more risk in their portfolios than they can tolerate. These are reasonable thoughts to have at times like these.

Last week, the S&P 500 was up 5.7%, the strongest week for the market since November 2023. The Nasdaq rose 7.3%, which was the best week for that index since November 2022. The rally was a result of President Trump’s announcement that he was pausing reciprocal tariffs for 90 days. And while there was no relief for China and the back-and-forth escalation between the two countries, markets latched onto the good news and rallied after a tough couple of months for equity investors.