In the latest Take 5, Ryan Detrick, Chief Market Strategist, and Sonu Varghese, VP, Global Macro Strategist, discuss the unexpected strength in stocks during May and June, why the economy has outperformed expectations, and what could keep momentum going in the second half of the year. From cooling inflation and potential Fed rate cuts to strong earnings and historical tailwinds, they unpack the data and sentiment driving today’s market optimism.
Key Takeaways
- Surprise Rally: The S&P 500 rose ~6% in May and another ~5% in June, nearing all-time highs faster than expected.
- Cooling Inflation: Recent inflation data has eased, helping boost expectations for Fed rate cuts—now possibly three by year-end.
- Policy Tailwinds: Markets are responding positively to postponed tariffs and a potential tax bill from Congress.
- Strong Earnings: Corporate earnings have been solid, with many companies raising their forward guidance.
- Historical Trends Favor July: July has historically been one of the best months for stocks, especially in post-election years.
- Broader Market Strength: Bonds, commodities, and diversified portfolios have all posted respectable gains in 2025 so far.
- Balanced View: Risks remain—from interest rates to geopolitical uncertainty—but the team remains cautiously optimistic.
