US Capital Market Newsletter – 2Q25

US equity markets posted solid gains in Q2 2025, led by the Magnificent Seven and other growth stocks. These stocks outperformed value equities, driven more by valuation expansion than earnings strength. While US equities lagged their counterparts slightly, they outperformed fixed income. Investor sentiment remained cautious amid persistent tariff uncertainties and subdued domestic demand, both of which could weigh on future growth. The labor market, however, showed resilience, with stable job creation and unemployment rate. Markets increasingly priced in expectations for a Fed rate cut later this year as policymakers respond to the decelerating economic momentum.