June Market Update: Trade Tensions, Tech Strength, and Bond Market Pressures

As we step into June, markets continue to wade through a complex mix of shifting trade policies, uncertain economic signals, and stubborn bond market headwinds. Here’s a quick rundown of what’s been happening — and what to keep an eye on moving forward:

Trade Policy in Flux

A recent May 28 court ruling blocked most of the Trump-era tariffs, adding a fresh layer of uncertainty. While the administration still has legal avenues to pursue, most expect tariff levels to remain largely unchanged for now.

At the same time, tensions with China are escalating — especially around critical mineral exports and ongoing issues with Taiwan. It’s a clear reminder that geopolitical risks aren’t going away anytime soon.

Earnings Season: Strong Results, but a Murky Road Ahead

First-quarter earnings were impressive. Nearly 80% of companies beat analyst expectations — a solid showing. That said, a big portion of the growth came from a handful of mega-cap tech names (yes, the “Magnificent Seven” again), which accounted for nearly half of the S&P 500’s 13% earnings-per-share growth.

Good news, yes — but markets may need more fuel to keep the rally going, especially with limited visibility into the back half of the year.

Are Markets Too Optimistic?

Investors still appear to be pricing in minimal impact from tariffs. That optimism might be premature. While new market highs are possible this year, it could take some upside surprises to offset the pressure tariffs place on inflation and corporate margins.

If the trade landscape stabilizes, attention may shift to the tax bill currently in Congress. Like them or not, tariffs could help fund an extension of the 2017 tax cuts — something the market would likely welcome.

Bond Market Headwinds Aren’t Letting Up

Treasury yields are facing pressure from multiple angles — potential inflation from tariffs, growing federal deficits, reduced foreign demand, and higher yields overseas. Until we see softer economic data, bond market volatility may remain part of the picture.

Looking Ahead

Key market drivers over the summer will include:

• Inflation reports

• Progress (or setbacks) in trade negotiations

• Central bank commentary

• The fate of the tax bill in Congress

Meanwhile, corporate America’s sales and profit margins will garner increasing support from artificial intelligence in the quarters and years ahead. We encourage long-term investors to watch for opportunities to add equities on dips, though periodic bouts of market volatility are to be expected until there is greater clarity on trade.

As always, please reach out if you have any questions.

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_{All index data from FactSet.}

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