Source: FactSet
The roller coaster quarter ended with record highs for stocks as trade, geopolitical tensions faded, and company earnings proved resilient. A globally diversified 60/40 stock/bond moderate risk portfolio gained 8.8% in the second quarter, as stocks and bonds gained. The U.S. dollar slump helped international investments outperform.
U.S. equities made a dramatic comeback to close the quarter at record highs on solid corporate earnings, retail investors buying the dip, and companies buying back their own shares. S&P 500 gained 25% from the lows post“liberation day” tariffs announcements to finish the quarter up 10.9%. The sell-off and the subsequent recovery were concentrated in a handful of large AI-focused technology companies dubbed the Magnificent Seven (Mag 7) – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. Mag-7 gained 18.6%, outperforming the remaining 493 stocks in the S&P 500 by 14% during the second quarter, but the group lags in performance for the year.
Within the U.S. equity markets, there was wide dispersion and a reversal of what worked in the first quarter. Fastgrowing technology companies had strong returns while defensive companies across energy and healthcare fell. As for size, smaller companies trailed their larger peers as the recovery was concentrated in large technology firms.
Progress on tariffs, easing geopolitical tensions, and a falling U.S. dollar helped international markets outperform. Additionally, domestic spending on defense and infrastructure helped stocks in Europe to gain 12.7%. Easing trade tensions between the U.S. and China helped Emerging Markets gain 12.2% for the quarter.
International bonds had strong returns on the heels of a weak dollar. In local currency, international bonds were up 1.9% vs 7.3% in dollar terms. Higher-quality U.S. bonds ended the quarter up 1.2%, while lower-quality bonds gained 3.5% as investors’ appetite for risk returned.
Finally, across other asset classes, gold gains while oil falls. Gold, the ultimate safe port in an economic storm, continued its climb higher, gaining 5.2% and now sitting on a 24% gain for the year. Gold’s rally was also partly driven by a weaker dollar.
Forward I am heavy, backward I am not, what am I?
LAST MONTH’S RIDDLE:
What building has the most stories?
ANSWER: A library.
Summer travel can add up quickly. Planning your trip expenses in advance and keeping track of receipts can help manage costs and avoid surprises.
Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.
Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.
It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.
Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.
Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.
Have a question or need a qualified professional? Fill out the form below and we’ll contact you shortly.
Check the background
of your investment professional
