BY SUZANNE HAZLETT, MBA, CIMA®, CFP®
Selling in May and going away is an old adage about stocks based on the theory that the period from November to April has significantly stronger stock market growth on average than other months. Not so this year, as equity markets continued to march higher in June, seemingly unfazed by heightened Middle East tensions and the administration’s position on reciprocal tariffs.
Despite an interim bout of volatility, it was a record-breaking month for the S&P 500 and the tech-heavy NASDAQ as both indices ended the month with new all-time highs. The Dow Jones Industrial Average was up 4% for June. Nine of the 11 sectors delivered positive returns, with Consumer Staples and Real Estate lagging.
Signs of an economic slowdown continued to mount, fueled by weak housing data, further cooling in the labor market, and an unexpected deceleration in consumer spending. Lower oil prices have put downward pressure on inflation in recent months; however, the impact of tariffs is still expected to affect prices in the months ahead. The risk of higher inflation has kept the Federal Reserve (Fed) in wait-and-see mode, with policymakers holding the benchmark interest rate steady at 4.25%-4.5% in June, as expected.
While the Fed’s June decision was easy, future policy actions are likely to become more challenging as the Fed must balance the risks of softening growth and a murkier outlook for inflation. The market still has two rate cuts priced in by year-end 2025.
Bond yields edged lower in June, with the 10-year Treasury falling to a two-month low of 4.25% as signs of economic weakness began to emerge. Comments from several Fed officials added to the positive sentiment in the bond market, pushing forward the expectations for a Fed rate cut to September, one month earlier than expected.
The Bottom Line
It’s safe to expect some give-and-take on tariffs and for the resulting negative headlines to spur volatility in the near future.
“Historically, when there’s a geopolitical event, the market reacts quickly and then tends to look through the ‘noise,’” said Raymond James Chief Investment Officer Larry Adam. “Ultimately, it’s the fundamentals that matter.”
Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNERTM professional. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC.. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. 675 Sun Valley Road, Suite J1 + J2, Ketchum, Idaho, 83340 208.726.0605 HazlettWealthManagement.com
