Perspectives Newsletter: Q2 2025
A market decline that began on “Liberation Day,” when investors were caught off guard at the level of “reciprocal” tariffs, turned into a rout in the early days of the quarter. The Trump administration ultimately paused the tariff rollout as the turmoil began to spill over into the bond market. The change in position from the administration was the first salvo in a multitude of short-term events that broke right for investors. It sparked a rally that took the S&P 500 higher by 24%, adding $10 trillion in overall market value and notching a new all-time high as the quarter came to a close. While the market gains were eye-popping, the dramatic shift in leadership truly stood out. After besting Growth stocks by 12.12% in the previous quarter, Value stocks lagged by -14.05% in the second quarter. This changing leadership backdrop is becoming common, with this being the fourth consecutive quarter where Growth and Value have flipped. The swings have been particularly intense with an average performance spread between the two themes of 10.37%. The other major trends from the first quarter - international over domestic and large capitalization over small - held true in the second quarter. Bitcoin shook off its first-quarter stumbles, roaring higher in the risk-on environment of the second quarter.
