A volatile second quarter ended with major stock indices at record levels even as the quarter began with sharp declines following the Trump administration’s announcement of global tariffs, driving the CBOE Volatility Index (VIX) to its highest levels since 2020. Despite trade policy uncertainty and increased geopolitical tensions as conflict between Israel and Iran dominated news, US stocks ended the quarter with the S&P 500 Index up 10.9%. Global stock markets fared even better with the MSCI All Country World ex USA IMI Index (net div.) up 12.7%.
The Federal Reserve continued to leave interest rates on hold citing uncertainty around the impact of tariffs on prices. The European Central Bank and Bank of England both diverged from the Fed by cutting their target rates again. Both emerging and developed non-US stock indices outperformed the US market with both the MSCI World ex USA IMI Index (net div.) and the MSCI Emerging Markets IMI Index (net div.) returning 12.7%.
IT stocks were market leaders, highlighted by strong quarters for Microsoft and Nvidia, with the sector overall gaining 23.2% compared to 11.0% for the broad Russell 3000 Index. Conversely, energy stocks underperformed as oil prices declined. Globally, small caps and value stocks tended to underperform large and growth companies. Profitability premiums were largely negative outside the US although close to flat in the US.
Past performance is no guarantee of future results.
Review the Full Market Report.png)
.webp)