June 2025 Market Update
In this June market update, Chief Investment Officer Brian Andrew, CFA®, reflects on a strong market rally fueled by individual investor optimism, solid corporate earnings, and continued enthusiasm around AI. Despite rising tariff rates and geopolitical tensions, the Fed’s steady policy stance has supported sentiment. Merit remains cautiously positioned, favoring high-quality equities, watching valuation levels closely, and maintaining flexibility as we monitor trade developments and global risks heading into the third quarter.
Key Takeaways:
- Retail Investors Drive Market Recovery Despite Tariff Risks: U.S. households have been a major force behind the market’s rebound, with retail flows pushing equity ownership and 401(k) stock allocations to new highs, even amid elevated tariffs and inflation concerns. The “There Is No Alternative” mindset continues to drive preference for equities over bonds.
- AI Optimism and Big Tech Earnings Fuel Momentum: Major gains in companies like Nvidia, Tesla, and Microsoft, supported by strong earnings and significant AI infrastructure spending, have reinforced investor confidence. The productivity promise of AI remains a central narrative propelling markets forward.
- Caution Ahead: Tariffs, Valuations, and Geopolitics Pose Risks: While sentiment is upbeat, the market still faces notable risks, including a potentially sharp rise in effective tariffs after July, high valuations, and escalating geopolitical tensions. Investors should stay alert for policy changes and volatility in the second half of 2025.
We hope you find this video both informative and insightful. For any questions, please reach out to your Merit financial advisor.
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