What a turnaround. After a dizzying drop in the first week of April following the Trump administration\u2019s announcement of new tariffs, stocks snapped back from bear market territory almost immediately once those tariffs were paused or reduced.<\/p>\n
Stocks ended the second quarter with a gain of more than 11%, with the technology sector\u2014the first quarter\u2019s biggest laggard\u2014leading the market higher once again. The Morningstar US Market Index<\/a> surpassed its February high in the final days of June, even as the threat of significantly higher tariffs on US trading partners remained.<\/p>\n It was the stock market\u2019s best quarter since 2023, when it returned 12% between October and December. Despite those gains, international stocks continued their first-quarter trend of outperforming the US market.<\/p>\n Analysts say investors appear to have priced out the worst-case scenario for tariffs and are looking ahead with more optimism. With a July 9 deadline for trade deals approaching next week, that optimism could be tested.<\/p>\n<\/p>\n Under the hood, growth stocks soared while value stocks fell behind, reversing the first quarter\u2019s trend. Non-US markets continued to outperform, though Chinese stocks fell behind.<\/p>\n Bond markets whipsawed as well, with yields spiking thanks to renewed concerns about stubborn inflation and an unsustainable fiscal picture in the United States. Even so, the Morningstar US Core Bond Index<\/a> ended the quarter with a return of 1.17%.<\/p>\n Key Stats: Q2 2025 Stock and Bond Market Performance<\/p>\n Q2 Stock Market Performance<\/p>\n The second quarter began with global investors blindsided by US President Donald Trump\u2019s announcement of harsher-than-expected tariffs on April 2. That sent stocks tumbling into bear market territory in a few days. Then, after Trump reversed course just a week after the announcement, stocks staged a remarkable rally, making up all those losses and then some. The market has climbed more than 25% since bottoming out on April 8, meeting the technical threshold for a new bull market of 20%.<\/p>\n The mega-cap tech stocks that make up the \u201cMagnificent Seven\u201d have fueled that recovery. The Morningstar Wide Moat Composite Index<\/a>, which includes the stocks that Morningstar analysts believe have the largest and most durable competitive advantages, gained 13.89% between March and June after falling 6.58% in the first quarter.<\/p>\n The outsized gains came despite lingering concerns over slowing economic growth, potentially sticky inflation and rising valuations. Strategists say the outlook for the market is mixed<\/a>, with bullish signals like robust earnings and a healthy economy helping to offset those risks.<\/p>\n As the technology sector soared, growth stocks regained the lead over value stocks in the second quarter after lagging during the first three months of the year. The US Growth Index returned 19.43% in the second quarter, while the US Value Index returned 1.33%. Large-cap value stocks performed worst among the nine categories of US stocks with a 0.89% return, while large-cap growth stocks fared best with a return of 23.05%.<\/p>\n The biggest story in the stock market in the second quarter was the rally in the tech sector, which returned 21.95% after falling more than 12% in the first quarter. But tech wasn\u2019t the only sector that saw a turnaround. Communication services stocks gained 18.79% after falling 6.19% in the first quarter, while consumer cyclicals rose 10.91% after losing 12.83% in the first quarter as tariff fears faded. Industrials rallied 13.08% after a 3.21% loss in the first quarter.<\/p>\n On the other side of the spectrum were healthcare and energy stocks, which declined after posting solid gains in the first quarter.<\/p>\n<\/p>\n Q2 Dividend Stock Performance<\/p>\n Dividend stocks also staged a comeback, though they didn\u2019t outpace the US market. The Dividend Composite Index rose 3.7% for the quarter compared with the broader market\u2019s 11.1% gain.<\/p>\n The Morningstar US Dividend Growth Index<\/a> rose 4.1%, while the Morningstar Dividend Leaders Index<\/a>, which includes the 100 stocks from the Composite Index with the highest yields, fell 2.3%.<\/p>\n<\/p>\n Global Market Performance<\/p>\n\n
![\"Line](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/07\/ZUINWQPHFRCM3PTAB5RMFFFOME.png\")
Value vs. Growth Performance<\/p>\n![\"Stylebox](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/07\/KMBMXKG5SFCQ5AR54M3I525WWI.png\")
Stock Sector Performance<\/p>\n