The "V" Shaped Rally of 2025

The last two weeks of July were about as action-packed as it gets for investors. Here’s a quick recap of the highlights:

The U.S. economy.  Gross domestic product grew at a 3 percent rate in Q2, better than the 2.3 percent forecast. Consumer spending helped spark the gain, which was also helped by…

Trade deals. The White House reached a trade deal with Japan and the European Union, but officials unsettled markets when they announced a new round of tariffs on other countries. The White House is optimistic that a deal can be reached with China, and that news helped…

Stock prices.  The Standard & Poor’s 500 pushed higher in July, a strong rebound since early April. Various factors have helped, but one of the most important factors has been…

Corporate profits. Big-name tech stocks posted some “magnificent” Q2 numbers, with many riding the AI wave. But they are not alone. 80% of all companies have checked in with Q2 numbers that were better-than-expected results, partly due to…

Inflation. While consumer prices have received a lot of scrutiny in recent years, only 228 S&P 500 companies indicated they were concerned about inflation in Q1 shareholder calls. But inflation is still a worry for…

The Fed: At its July meeting, Fed officials said, “The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.” A few days later, a disappointing jobs report brought the Fed’s decision to leave short-term rates unchanged back into the spotlight.

How should you cope when you get a two-week wave of economic information? At the risk of sounding like a broken record, the best way is to focus on your overall strategy and tune out the noise. A couple of charts help illustrate my point.

In “An Up, Down, and Up Year,” you can see that stock prices were under pressure in early April on concerns over how the trade situation was unfolding. Fear spread, which led some investors to move to the sidelines. But notice the “V” shaped rally that followed.

In “Going with the Flow?,” you can see that almost every major Wall Street firm adjusted its 2025 forecast lower after the April 2 tariff update. What’s more interesting is that many changed their minds—again—and revised their estimate higher as stock prices improved through May and June. Notice the “V” shape here, too. Will they adjust again? Maybe. 

One thing is certain: the only thing we know about the rest of 2025 is the number of days left on the calendar! So, stay focused, expect volatility, and remain committed to the approach we’ve created together.

^{1. CNBC.com, July 30, 2025. U.S. economy grew at a 3% rate in Q2, a better-than-expected pace even as Trump’s tariffs hit}

^{2. USAToday.com, July 29, 2025. Trump's trade deal with the EU: What it means for your wallet}

^{3. Insight.FactSet.com, July 25, 2025. S&P 500 Earnings Season Update: July 25, 2025}

^{4. Insight.FactSet.com, Jun 13, 2025  Are More S&P 500 Companies Citing “Inflation” on Earnings Calls for Q1?}

^{5. CNBC.com, July 30, 2025 Divided Fed holds key interest rate steady, defying Trump’s demands for aggressive cut}

^{6. CNBC.com, August 1, 2025. U.S. added just 73,000 jobs in July and numbers for prior months were revised much lower}