Big Tech’s Big Bang Recovery Drives U.S. Stocks to New Highs in Q2 2025

So, how did the markets really do in the second quarter? And what should you keep an eye on next? Let’s take a closer look beyond the numbers at what drove the markets this quarter.

Q2 was a roller coaster ride of sharp swings, fast turns, and a surprising finish.

If you had a globally diversified 60/40 moderate risk portfolio, you potentially saw a solid return of about 8.8%. Why? Global stocks set new highs. Trade tensions eased, geopolitical worries took a breather, and company earnings stayed resilient. That combination helped stocks hit new highs and gave bonds a steady boost.

U.S. Stocks: Big Tech Drove the Comeback

U.S. equities made a strong comeback to close the quarter at record highs. What fueled the rally? Solid corporate earnings, investors buying when prices dropped, and a wave of companies purchasing their own stocks.

The U.S. equity market had its ups and downs. What worked in Q1 didn’t work in Q2. The S&P 500 jumped 10.9% for the quarter and is now up 25% from its lows following the tariff announcements in spring. But here’s the deal.

Most of the heavy lifting came from the AI-focused tech giants dubbed the "Mag 7": Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. At 18.6%, they collectively outpaced the other 493 stocks in the S&P 500 by over 14%. The "Mag 7" clearly sprinted ahead this quarter but still fell behind in their year-to-date performance.

These fast-growing tech stocks were the big winners, while more traditional sectors like energy and utilities didn’t pull their weight. Smaller companies also struggled, as most of the momentum stayed focused on the mega-cap tech giants.

International Markets Outperformed as The U.S. Dollar Fell

While big tech grabbed the headlines at home, a weak U.S. Dollar helped developed international stocks look even more impressive. MSCI EAFE gained 12.1% in dollar terms versus 5.1% in local currency during the quarter. Gains within EAFE came primarily from European stocks which climbed 12.7%, thanks in part to increased domestic spending on defense and infrastructure. Emerging markets weren’t far behind, growing 12.2% as U.S.-China trade tensions showed signs of cooling off.

Bonds Added Stability and Support

In a quarter full of surprises, bonds did exactly what they are designed to do. They delivered steady support to investment portfolios as the markets bounced back.

International bonds increased 1.9% in local currency. Closer to home, U.S. investors saw returns jump to 7.3%, again driven by a weaker dollar.

"With higher-quality bonds rising steadily by 1.2% and riskier bonds showing a 3.5% return, it's clear investors' appetite for risk has returned."

Gold Surged While Oil Pulled Back

It was a tale of two assets in the commodities space. Gold, the ultimate safe port in an economic storm, had a standout quarter and gained 5.2%. It’s now up 24% for the year. A weaker dollar and ongoing global uncertainty kept demand high. Meanwhile, oil prices pulled back after an early spike tied to tensions in the Middle East. Since supply stayed steady, there wasn’t enough pressure to drive prices up.

Money Moves in the Months Ahead

The second half of 2025 will no doubt bring its own challenges. Central banks, politics, and world events will continue to shape the markets. It’s natural to worry about what might go wrong, but the best move you can make is to focus on what you can control.

Stick to a strong financial plan, keep your portfolio well-diversified, and stay focused on your long-term goals.

That’s how you stay prepared and agile no matter what the ride ahead in the markets brings.

Source: FactSet. Data as of 06/30/2025

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.

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8152404.1| 07/2025 | EXP 07/31/2027

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