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June Market Commentary: The Limits of Data in a World That Keeps Changing Thumbnail

June Market Commentary: The Limits of Data in a World That Keeps Changing

Markets & Economy

May Recap and June Outlook

May reminded us that markets aren’t just driven by numbers. They’re driven by stories, headlines, and shifting expectations. Stocks moved higher, mostly because investors believe a solution on tariffs will eventually show up. Meanwhile, the Fed stayed the course, saying it needs more data before making a move on rates. On paper, the economy looks solid. But there’s a growing sense that cracks could be forming underneath.

It’s harder than ever to make sense of what’s really going on. Tariffs are unpredictable. One day the impact looks small, the next day it’s a major drag. Even good news, like job growth beating expectations, adds confusion. Strong data makes it harder for the Fed to justify cutting interest rates.

Let’s dig into the data:

  • Inflation (CPI) hit 2.3% for the 12 months ending in April. That’s the lowest since February 2021. Monthly inflation rose just 0.2%.
  • Jobs: Non-farm payrolls in May came in at 139,000, ahead of the 130,000 expected. The unemployment rate held steady at 4.2%.
  • Business activity is slowing. The ISM index dropped below 50, the tipping point between growth and contraction. New orders fell to their lowest level since December 2022.
  • GDP may be picking up. The Atlanta Fed’s GDPNow model showed a Q2 estimate of 3.8% in early June.

What Does It All Mean?

The housing market is the one everyone’s watching. And right now, it’s not looking great. The pause in rate cuts, plus tariff uncertainty and slowly rising prices, has created a stuck market. Sellers are now outpacing buyers by 34 percent, according to RedFin. That’s the biggest gap in over 12 years. Mortgage rates climbed above 7 percent in May before dipping a bit in June, but that’s still too high for many buyers to jump in.

So what’s the Fed going to do? There’s real pressure to start cutting rates. Some are saying the Fed might be late again, just like in 2022 when they waited too long as inflation climbed. Now that inflation is near 2 percent, the risk is not runaway prices. It’s the opposite.

If prices are rising while the economy stalls, that’s called stagflation. The Fed could cut rates to soften the impact of tariffs, but that could restart inflation. If that happens, people pull back on spending. Since consumer spending drives more than 70 percent of GDP, the result could be a flat or shrinking economy. It’s a cycle that feeds itself.

Right now, the CME FedWatch Tool shows most people don’t expect the Fed to cut until September. Even if stagflation does set in, there’s hope it could be brief. We may see a short-term dip in demand and business investment, which could cool off wages and prices. That might give the Fed more flexibility later in the year.

Chart of the Month: Inflation Is Trending Down (for Now)

Source: Bureau of Economic Analysis

May Equity Market Highlights

  • S&P 500 gained 6.15%
  • Dow Jones Industrial Average rose 3.94%
  • S&P MidCap 400 climbed 5.25%
  • S&P SmallCap 600 went up 5.07%

Source: S&P Global, data as of May 30, 2025

Ten out of eleven S&P 500 sectors ended May with gains. Tech led again, up 10.79%, while health care lagged behind, falling 5.72%. The “Magnificent Seven” tech giants added to May’s rally after a slower start to the year. Volatility dropped, with average daily price swings falling to 1.09%, down from 3.21% in April. Earnings season is nearly over. Out of 488 companies that have reported, 77.3 percent beat their earnings estimates.

May Bond Market Highlights

  • 10-year Treasury yield ended at 4.40%, up from 4.18%
  • 30-year Treasury yield closed at 4.92%, up from 4.69%
  • Bloomberg U.S. Aggregate Bond Index returned -0.39%
  • Bloomberg Municipal Bond Index returned -0.13%

The Takeaway

We’re halfway through the year, and now is a good time to pause and check in. Whether your goals are about financial freedom, giving back, or making sure your dollars support the causes you care about, a midyear review can help you stay on track.

Here are a few ways to tighten things up:

  • Revisit your budget. Are you on track? Any big expenses coming up? Is your emergency fund where it should be? Summer spending can get out of hand fast. A quick check-in now can help you set healthy limits.
  • Make your cash work harder. Interest rates are still high. Moving idle cash into a high-yield savings account or locking in a CD can boost your overall return.
  • Harvest losses early. If you have investments that dropped in Q1, now might be a smart time to take those tax losses. You don’t need to wait until year-end to make a move.

The headlines may feel overwhelming, but you’re not powerless. The choices you make with your money reflect your values and your vision for the future. Stay engaged, stay informed, and remember: every dollar is a vote for the world you want to live in.

This work is powered by Advisor I/O under the Terms of Service and may be a derivative of the original. The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.