A half-year roundup: 50 events shaping 2025 so far

By Federico Cuevas and Audrey Weiss

Halftime report

Optimism soared for U.S. markets at the beginning of 2025 driven by Trump 2.0’s pro-growth policies. However, unexpected headwinds like tariffs impacted global markets. Despite these challenges, markets powered through and reached new all-time highs by the end of the first half of the year.

The macroeconomic landscape has mirrored this whirlwind. After the Trump administration reversed its most draconian tariff policies, inflation expectations rose to 4.4% but ticked down to 4%. The University of Michigan Consumer Sentiment Index rebounded from 52 to 60 and the U.S. composite Purchasing Managers’ Index (PMI) recovered to 52.8. Market performance also turned around because the worst-case scenarios came off the table. Uncertainty still looms. Hard data remains resilient but may moderate as tariffs work their way through the economy.

Despite the chaos, the S&P 500 (+5.4%) ended the first half of the year at record levels, marking the fastest rebound ever after a greater than or equal to 15% drawdown. Since the peak sell-off in early April, the index recovered $10.2 trillion in market value. In all, roughly 60% of the index’s constituents are in the green this year. The Magnificent 7 is no more. Meta (+22.8%), Microsoft (+16.7%) and Nvidia (+14.2%) have outperformed, but the other names have lagged. As the artificial intelligence (AI) trade broadens out, the industrials (+12.3%) sector has emerged as the top performing sector so far this year. Solid first halves of the year tend to beget solid second halves – in the 11 instances since 2000 where the S&P 500 was up at least 5% in the first half, it rallied further in the second half every time, with the full year averaging a gain of over 19%.

Conversely, Europe surged on the 4 “D’s”: defense spending, debt brakes, diversification benefits and discounted valuations. The Euro Stoxx 50 hit all-time highs, now up +7.9% and +22.7% in USD terms. Banks led the Stoxx Euro 600 with a +27.3% gain, marking their strongest first-half since 1997.

Overall, the first half underscored the power of diversification. After three years of concentrated performance, the 60/40 portfolio made a strong comeback, surging nearly +9%. As we move forward, sentiment has improved and volatility has eased. It’s been a “vegetables first, dessert later” kind of year, setting the stage for a rewarding second half.

Heading into the holiday weekend, we offer a look at the events dominating headlines this year. Happy Fourth!

All market and economic data as of 07/03/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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