2025 Midyear Market Outlook: CIO’s 3 Key Investor Themes to Watch

The first half of 2025 is in the books. While it may not have played out exactly as we envisioned, equity markets are roughly where we expected them to be. The S&P 500 has returned about 6.2% so far this year.¹

Headlines are loud, and investors are looking for direction. Here are three key themes to help anchor your financial strategies for the rest of the year.

1. Consumer Resilience Has Weathered Policy Uncertainty For Now

Policy concerns have been front and center this year. However, they have not significantly impacted the real economy. That is largely because of the resilience of a powerful engine, the U.S. consumer.

Since mid-2023, wage growth has consistently outpaced price growth.² Personal income rose 0.7% in April, delivering another month of healthy gains.³ Rising wages and income have helped consumers strengthen their balance sheets and sustain higher levels of spending.

At some point, the cumulative effect of trade policy uncertainty may affect labor markets and slow growth. But for now, that impact remains on the horizon.

It’s important to stay grounded in the economic data and not in the headlines.

“Consumers are still driving the economy, and that strength continues to matter.”

Most consumers are still financially healthy.

2. Big Tech Is Back and Investing for Growth

Seven of the largest technology companies in the S&P 500 grew earnings by 28% in the first quarter: Apple, Microsoft, Amazon, Alphabet, Nvidia, Tesla, and Meta.⁴

While many companies have pulled back on capital spending amid uncertainty, the “Mag 7” continue to invest in their businesses. They are building for scale, innovation, and growth, particularly in areas like artificial intelligence and cloud computing. Big tech is on track to spend around $200 billion on AI infrastructure in 2025.⁵ That level of investment helps explain why valuations remain high and why long-term growth remains strong.

Review portfolios with an eye toward where growth is happening. Are portfolios positioned to capture these trends? Understanding where allocations lie in the tech and growth sectors can unlock long-term opportunities.

3. Pro-Growth Policies Could Offset Slowdowns

Despite ongoing policy uncertainty, there is potential for pro-growth policies to roll out in the second half of the year. Tax cuts and deregulation are being discussed as possible catalysts to help offset some of the impact from trade tensions and tariffs.⁶ While pro-growth policy shifts may not cancel out the challenges from higher tariffs, they may provide some support to the economy and help sustain momentum.⁷

What the First Half Taught Us

"If there’s one lesson to take away from the first half of 2025, it’s this: tune out the noise and stay invested."

This is not about perfect timing. It’s about clarity, discipline, and thoughtful action.

Keep focused on financial goals instead of the headlines to help build long-term financial confidence.

Sources: 1. FactSet; 2. USA Facts; 3. Bureau of Economic Analysis (BEA); 4. FactSet; 5. Bloomberg; 6. Reuters; 7. S&P Global

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.

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.

The exclusion of investments based on industry or ESG factors reduces the number of available investment choices and can impact overall investment performance.

Christian Chan, CFA is the Chief Investment Officer for AssetMark, Inc. and is Senior Vice President of AssetMark Investment Management, where he oversees AssetMark’s proprietary investment strategies.

AssetMark, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. AssetMark Asset Management, a division of AssetMark, Inc., includes the firm’s proprietary investment strategies.

©2025 AssetMark, Inc. All rights reserved.

8134018.1 | 07/2025 | EXP 07/31/2027

For general public use.