June 2025 - Market Update

Data Dashboard

Stock Market

June was a strong month for the markets, with major equity indices climbing back to all-time highs. Year-to-date, international stocks have continued to outperform U.S. equities, helped by a weaker U.S. dollar boosting returns for American investors. Within the U.S. market, Technology remained the clear leader, gaining nearly 10% in June alone, while more defensive sectors like Consumer Staples and Utilities lagged behind. Emerging Markets also outperformed last month, whereas Developed International stocks trailed their U.S. peers in June but remain up double digits for the year. Small and mid-cap stocks are still trailing large-cap names year-to-date, but we are starting to see broader market participation beyond just the mega-cap technology companies—a healthy sign for the overall market’s strength.

June also brought signs of renewed life in the IPO market after a sluggish first half of the year. Notably, Circle Internet Financial (CRCL) surged nearly 170% on its first trading day, fueled by investor enthusiasm for blockchain and stablecoin adoption. AI-focused cloud company CoreWeave (CRWV) also made headlines with a strong debut, reflecting continued appetite for growth-oriented technology offerings. These successful launches could signal a more receptive environment for new listings in the second half of the year if market conditions remain supportive.

June Monthly Returns (by Sector)

Bond Market

At its June FOMC meeting, the Federal Reserve maintained its “hold and see” stance, keeping interest rates unchanged while revising its GDP growth forecast for 2025 down to 1.4% from 1.7%. The median year-end policy projection was left unchanged, still implying two 25 basis point rate cuts next year. Despite record stock market highs, the U.S. dollar fell to a three-year low in June. Inflation data showed continued easing, with both the Consumer Price Index (CPI) and Producer Price Index (PPI) coming in below expectations. However, there are lingering concerns that tariff-driven cost pressures could contribute to higher inflation in future readings.

Consumer sentiment declined across all income levels, although the labor market has remained resilient, with the unemployment rate holding steady at 4.2%. Markets remain on edge due to President Donald Trump’s aggressive calls for rate cuts, which could pose a challenge to the Fed’s independence when Chairman Jerome Powell’s term expires next year.

As of July 2, 2025, the “One Big Beautiful Bill Act” passed the Senate and has now moved to the House of Representatives for further consideration. The Senate version of the bill seeks to :-

• Make many of the 2017 Trump tax cuts permanent, including changes to individual rates, the standard deduction, and the child tax credit
• Provide additional funding for border security and Immigration and Customs Enforcement (ICE)
• Additional $150B for fiscal 2025 defense spending
• Enact significant cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) through stricter eligibility requirements
• Raise the national debt ceiling by $5 trillion

Meanwhile, market volatility continued to ease, with the VIX index declining further to end June at 16.76. This relatively low level indicates growing investor optimism and confidence in market stability.

June Economic Dashboard

Tactical Trades

In our tactical low-volatility portfolio, we have further increased the credit risk in our portfolio, introduced high-yield & intermediate-term corporates, in addition to our positions in convertibles.

In our ETF portfolio, we have also switched from our MSCI Mexico position to South Korea.

General Client Considerations

The IRS increased the 2025 annual contribution limits for 401(k), 403(b), most 457 plans, and Thrift Savings Plans (TSP) from $23,000 to $23,500. Even mid-year, adjusting your contribution elections can help you spread contributions more evenly over the remainder of the year and maximize your tax-advantaged retirement savings. If you're participating in a company-sponsored retirement plan and plan to max out your contributions, be sure to check with your HR department to confirm your contribution amount reflects the new limits.

Additionally, if you are 50 or older, the catchup contribution limit for 401(k), 403(b) and TSPs has remained the same at $7,500. If you are born in 1975 or earlier, you can contribute up to $31,000 to these accounts in 2025. You do not have to wait until your 50th birthday to make catchup contributions - the contributions can start on January 1st of the year you turn 50.

Starting 2025, if you are aged between 60-63, you can contribute up to a total of $34,750 (eligible for a higher catch-up contribution due to SECURE 2.0).

For more information, check out our newsletter on 2025 Retirement Account Limits.

As always, reach out with any questions or concerns.

Thanks,

The Friedenthal Financial Team

‍