Paragon Perspectives: The Long Watch
2025 Mid-Year Market & Economic Update
As of June 30, the S&P 500 has posted a solid 5.5% gain year-to-date. That’s not fireworks-in-the-sky performance, but in a year featuring war headlines, political wrangling, TikTok finance theories, DOGE chatter, and tariff tension worthy of a Netflix drama, it’s a reminder that markets have a way of climbing walls of worry—even if the news cycle is auditioning for its own reality show.
A Resilient First Half
Despite geopolitical conflict, political standoffs, and economic uncertainty, the first half of 2025 reminded us that markets are driven not just by headlines, but by fundamentals. As we noted in our 2025 Market Outlook earlier this year, themes like productivity gains, AI-driven efficiency, and broader market participation continue to hold up well—and they’ve helped insulate portfolios from much of the noise. It’s as if the market slipped on noise-cancelling headphones and kept marching.
The Economy Bounces Back
After contracting slightly in Q1 (-0.2%), the economy appears to have found its footing. The Atlanta Fed now projects Q2 real GDP growth at 2.9%. Much of this turnaround is due to import fluctuations linked to the ongoing tariff saga—dubbed by some pundits as “Trump’s Tariff Turmoil.”
While headlines have focused on disruption, markets are taking it in stride. Since President Trump postponed his proposed reciprocal tariffs on April 9 (only to rescind that delay on June 26), investors have largely shrugged. Corporate America seems to have adjusted its playbook: pass on costs, boost productivity, or sidestep import exposure altogether. Adaptability, it turns out, is one of Wall Street’s lesser-celebrated superpowers.
Earnings Resilience Amid the Noise
Q2 marks the ninth consecutive quarter of projected earnings growth, and that includes every sector except energy. Tech and services led the charge again, driving both profit margins and forward earnings expectations higher. With forward S&P 500 profit margins hovering near a record 13.7%, analysts appear confident in corporate adaptability.
In fact, the market rally since April 9 suggests optimism that tariff tensions may cool by late summer. Of course, the presidential press office could change that outlook with a single social media post—but for now, the mood remains cautiously upbeat.
Bond Yields Fall, Rate Cuts Loom?
The 10-year Treasury yield has declined from 4.8% in January to 4.24% at the end of June. That’s a notable drop and may hint at growing expectations for rate cuts. Several Fed officials (including Waller, Bowman, and Collins) have been publicly advocating for easing, though Chair Powell remains measured—perhaps waiting for clearer signs, or just the toast to pop. Adding to the suspense, speculation is building over who President Trump might select as the next Fed Chair. Depending on that choice, we could see the Fed’s tone shift from cautious to dramatically different—so stay tuned, the script may still have a few plot twists left.
Labor market data adds fuel to the cut-watch fire: Initial jobless claims fell to 236,000 (week of June 20), while continuing claims rose slightly to 1.97 million. The unemployment rate ticked up to 4.3%, but that’s still considered full employment territory. If the Fed acts in July, housing and consumer sectors could see renewed support.
Geopolitics: War and Oil Prices
June brought a new layer of risk as tensions between Israel and Iran escalated into outright conflict. Israel’s launch of “Operation Rising Lion” on June 13, targeting Iranian nuclear facilities, followed weeks of military posturing. The situation culminated in a dramatic U.S. involvement and a tentative ceasefire, which, while fragile, helped send oil prices downward. That decline may be a quiet economic boost to Asian economies and India in particular.
Political Crosswinds and Investor Sentiment
Domestically, the Senate has passed a version of the budget bill, with a showdown over reconciliation with the House expected in July and August. Meanwhile, investor sentiment remains skeptical. The AAII Bull-Bear Ratio—which compares the number of individual investors who are bullish versus bearish on the market—is still low. This tells us that many investors remain wary even as markets edge toward all-time highs. From a contrarian standpoint, that nervousness could actually be a bullish sign that we may see more gains. When everyone’s bracing for bad news, sometimes the surprise is that things are just… fine.
Looking Ahead: Volatility in Late Summer?
With markets near peak levels, forward earnings strong, and bond yields falling, the outlook feels tentatively positive. That said, August and September are traditionally volatile months—and given the fragile ceasefire, tariff uncertainty, and fiscal negotiations ahead, we wouldn’t be surprised by a few bumps in the road.
As we shared in our 2025 Market Outlook, we continue to believe that focusing on productivity-driven sectors, diversification beyond mega-cap tech, and disciplined risk management will be key to navigating the second half of the year. Because let’s be honest—markets don’t need perfect economic conditions to perform, but the less chaos there is the better.
Thank You for Joining Us
A special thank you to everyone who attended our Mid-Year Outlook event on June 18. We appreciate your time, your questions, and your continued trust in our team. If you missed it or want to revisit the discussion, the video will be available very soon—stay tuned.
At Paragon Wealth, we continue to emphasize diversified portfolios and long-term planning over knee-jerk reactions. If you have questions about how today’s economic landscape might affect your investment strategy, don’t hesitate to reach out.
Give us a call or email to learn more.
About Ricardo
Ricardo J. Ferreira is the Portfolio Manager at Paragon Wealth, a firm he co-founded with Charlie McNamara, III, and Phil Rosenau. With a passion for finance and a talent for solving complex financial challenges, Ricardo leads the firm’s investment strategies, ensuring clients receive personalized and forward-thinking solutions.
A decorated U.S. Navy Veteran, Ricardo served at N.A.E.S. Lakehurst and aboard the USS George Washington, where he worked in aviation support. After his military service, he studied economics at Liberty University and began his financial career at Prudential Financial, where he met his future partners, Charlie and Phil.
Outside of work, Ricardo enjoys spending time with his family. He is married to Tina, owner of Main Street Accounting & Tax, and they have two children. Active in his community, Ricardo participates in various local events and serves on the finance council at St. Jude Parish in Chalfont. A passionate runner, he can often be found competing in local 5k and trail races on the weekends. To learn more about Ricardo, connect with him on LinkedIn.
Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Group and Paragon Wealth Management are separate entities from LPL.