Welcome back from the long weekend. We’re officially one week into the second half of the year. I’ve spent the last week reviewing dozens of Wall Street outlooks for the rest of 2025 — this morning we’re unpacking the findings.

Second-half outlook

Financial markets held their ground through headline-fueled volatility in the first half of the year, and Wall Street expects more of the same over the next six months.

The S&P 500 gained 5.5% through June, Big Tech regained its momentum, and geopolitics didn’t derail the bull case.

International equities fared even better, with rest-of-world stocks up nearly 17% in the first half.

But much of that strength came from a weakening US dollar rather than a burst of global optimism.

Notably, the Bloomberg US Economic Policy Uncertainty Index has soared above levels seen during the 2008 crisis, dot-com bubble, 9/11 attacks and the collapse of the Soviet Union.

Tariffs, central bank paralysis and an unpredictable White House have made the market’s recovery from April lows feel tenuous. 

Second-half outlooks vary across Wall Street’s top research desks, but they all agree that policy risk and portfolio resilience will define the rest of the year.

A stubborn Fed

Fed Chair Jerome Powell insists the central bank must “wait and see” how tariffs ripple through the economy before making its next move.

As a result, markets have slashed rate-cut expectations in half, from four at the start of the year to two now.

Apollo, for one, expects just one rate cut in 2025. JPMorgan strategists forecast two. Goldman Sachs last week updated its prediction to three, starting in September, arguing that moderating growth and elevated borrowing costs will force the Fed’s hand.

Traders on the prediction market Kalshi see two cuts as the most likely scenario.

Powell’s caution starts with inflation, even though it’s surprised to the downside every month this year. Still, the Fed worries that tariffs — which it considers stagflationary — could stoke prices again. 

In his calculus, avoiding an inflation rebound outweighs getting ahead of a growth slowdown.

Investors keep betting on stocks

For all the macro ambiguity, investors keep buying. 

Big Tech is back in favor, international equities are having a breakout year, and volatility has collapsed since April.

Depending which narrative you prefer, markets are either betting on a soft landing or deciding that there’s no better place to park capital than the stock market.

That said, neither bullish narrative is bulletproof. 

Apollo’s chief economist Torsten Slok warned in his second-half outlook that earnings revisions are trending lower, and that tariffs have already weighed on corporate forward guidance and CEO sentiment.

Consumer data, too, is still mixed, and any surprises on trade or rates could shake the fragile setup.

“The key question is whether markets can overlook any emerging weaknesses in hard data, viewing them as backward-looking, provided that soft data continues to improve,” wrote Goldman Sachs strategists.

“However, evidence of trade tensions affecting hiring and causing a rise in unemployment could pose downside risks to consumer spending, potentially reigniting recession fears and weighing on risk assets.”

Still, most Wall Street outlooks reflect cautious optimism. Here’s how top firms are positioning:

• Goldman Sachs: Prefers S&P 493 over Magnificent 7; favors small caps, Europe, private credit and AI infrastructure

• JPMorgan: Likes quality large caps, dividend growers and infrastructure plays

• Capital Group: Focused on dividends, healthcare, industrials and AI adoption

• Apollo: Cautious on margins, capex and earnings guidance

• DataTrek Research: Bullish on US large caps and sees value in small caps; expects US dollar weakness to driving international equity returns 

• Gavekal Research: Likes Latin American assets and commercial bank stocks

Bottom line: The S&P 500 is green on the year and momentum is building, but that resilience is about to be tested. A Fed on pause, softening corporate confidence, and shaky earnings expectations suggest the next leg of the bull-run could be harder to sustain.

Market snapshot

Elsewhere

🤝Tariffs will return to April levels by August 1 for countries without deals. That’s what Treasury Secretary Scott Bessent said Sunday. He rejected the idea that August 1 marks a new trading deadline from the original July 9 date, but said it still could give nations more time to negotiate. (CNBC)

📈 US stock funds rebounded 10.1% in the second quarter. That offsets the losses from earlier in the year. International stock-funds saw an 11.9% gain in that period, while gold funds led everyone with a 16.5% return. (WSJ)

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Rapid-fire

• The US is close to clinching several new trade deals to be announced in the coming days (Reuters)

• Elon Musk formed the “America Party” as a new political party (CNBC)

• CFOs expect higher prices and a slowing economy in the second half of the year, new survey finds (Barron’s)

• Investors expect bitcoin and other cryptocurrencies to keep rallying through 2026 (Investopedia)

• OPEC+ agreed to a larger-than-expected oil production hike in August (Reuters)

• Deadly flash floods in Texas have killed nearly 70 individuals (WSJ)

• This financial powerhouse looks cheap and could rally 25% (Best Ideas Club)

• Inflation, housing costs, and AI are crushing Gen Z’s economic outlook (Opening Bell Daily)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].