June 2025 Market Recap

We are excited to share the latest market insights from the Goldman Sachs Wealth Management Investment Strategy Group (ISG). 

Despite continued volatility stemming from trade negotiations and a 12-day war between Israel and Iran, equity markets were up, with the S&P 500 ending the month at a new record high.  

Here’s a recap on what happened in the market and economy.

The markets: a new record high despite volatility 

The S&P 500 ended June at a new record high, generating a 5.1% return. Markets outside the US also rose with MSCI EAFE (index including companies from Europe, Australasia, and Far East) returning 2.2% and MSCI EM (index including companies from 24 emerging market countries) returning 6.1%.  

Trade talks between the US and its major trading partners continued in June, but no new deals were signed ahead of the 90-day pause on reciprocal tariffs on July 9. ISG notes that the deadline was extended in July to August 1.      

Yields on 10-year US treasuries dropped 17 basis points in June while the US dollar remained under pressure, depreciating 2.5% on the month. ISG believes this is driven in part by a widening interest rate differential in favor of the euro and repatriating flows back into the euro area. The dollar’s repricing also appears to reflect investors questioning the durability of US preeminence. 

The conflict between Israel and Iran caused a temporary pullback in the market and spike in oil prices, but with conflict now subsiding, the global supply of oil and natural gas has not been permanently impacted and prices have returned to pre-conflict levels. Equity prices followed suit and rebounded quickly thereafter. 

The US economy: signs of softening

The US economy remains healthy but is starting to show signs of softening. Economic data released in June showed weakness in personal income and consumer spending, two key indicators of a slowdown. While the labor market is holding up and layoff rates remain low at 1%, jobs are becoming harder to find, an indication that companies are maintaining current staffing levels but are reluctant to increase headcounts amid heightened policy uncertainty.  

The impact of the administration’s immigration policy on the supply of labor is not yet visible in the data, but that is likely to change in coming months along with the effects of higher tariffs. 

Headline CPI inflation rose to 2.7% year-over-year in June. While overall goods inflation was still subdued, several categories with exposure to higher tariffs, such as household appliances and toys, saw notable price increases. Inflation is expected to accelerate over the summer months, although the passthrough and magnitude of tariff effect remain uncertain.  

The Federal Reserve remained on hold at the June meeting and provided little clarity around the timing of the next policy rate cut. Fed Chair Jerome Powell reiterated that the economy is in a solid position and that the FOMC can afford to wait until there is more information on the inflationary impact of higher tariffs. ISG continues to expect that the Fed will resume the easing cycle at the September meeting and deliver a total of three 25-basis-point rate cuts this year.

Looking ahead

ISG will be closely tracking developments around reciprocal tariffs as well as the policy meetings of the European Central Bank and the Fed.