Today is the 183rd day of 2025, meaning we’re officially halfway through the year. But for all its twists and turns, investors might feel like we’ve already lived a full year in only the first six months.

Why? Well, just yesterday (April), we were facing a bear market thanks to Trump’s ‘tariff inquisition’ and shaky trade talks. But stocks have come all the way back from the depths, wrapping Q2 in fantastic fashion. It might be a sign of things to come.

Midway check-in: The S&P 500 and Nasdaq 100 notched all-time highs in the lead-up to the end of Q2 — rallying 24% and 31% respectively from their Apr. 8 lows. Those came amid worries about tariffs, “uncertainty,” and negative economic data readings. But despite those concerns, investors are bidding on a wide array of stocks — not just the Mag7, but many different sectors — and promising to usher the rally in US stocks higher.

• Investors are enthused by less volatility and promising Trump trade developments entering July, which Goldman Sachs researchers say is the “strongest month” historically for the S&P 500.
• With the Fed still expected to cut rates twice this year, investors are anticipating more upside in the S&P and Nasdaq — up 5.8% and 7.4% YTD — as well as in long-stagnant small and mid-caps in the Russell 2000 (-1% YTD).

Dollar Tumble

In our monthly Bear & Bull survey, 66% of readers described themselves as ‘Bullish’, lending credence to a continuing rally. However, investors should be aware that stock strength is masking risks tied to the Dollar and Treasurys — both of which could deliver surprises.

• Despite the market comeback, the US Dollar hasn’t recovered since Trump’s Liberation Day announcement — down 10% in the first half of 2025.
• Confidence in the Dollar and Treasurys is slipping, not just because of the tariff tiff, but due to a deeper fiscal credibility issue, worsened by the go-ahead on the GOP tax and budget bill.

True value: Even with stocks rebounding, the weaker Dollar has steepened the losses relative to other global peers and assets — meaning many investors still have a long way back to ‘get even’ after a tumultuous first half. Thankfully, plenty seem willing to saddle the risk, betting on the comeback trade (and an eventual Dollar rebound) to define the second half of the year.