Market Commentary for 2025
Written 7/01/2025
Updated 7/10/2025
Published 7/11/2025
Detailed Report:
Recap: First Half 2025:
The start of 2025 marked a continuation of the pullback that began in mid-December. The uncertainty of President Trump's tariffs played a significant role in shaking up Wall Street and our trading allies across the globe.
Entering 2025, I anticipated a 15% to 20% market pullback due to the 2023–2024 run-up. I didn't get the cause correct, but the result was the same: the S&P 500 and the Nasdaq approached a 20% decline. However, the five-month decline led to an impressive recovery that took only seven weeks, creating a strong buying opportunity in late April.
Investors in general were not surprised, as we continue to see a battle of words between the President and Federal Reserve Powell over his lack of action to lower interest rates.
While some cable personalities and professional managers predicted a recession, stagflation, and other economic calamities in 2025, my research revealed something different. In December 2024, I projected a strong market for 2025, following a pullback that was expected to occur in the first half of 2024.
Late April marked the beginning of a strong resurgence in the market, but unlike 2023 and 2024, the rally was much broader. It didn't rely solely on the "Magnificent Seven": Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
Our position during the pullback was to show patience and allow the static to clear. We felt the pullback was overdone, especially in sectors that were unaffected by tariffs. With some clients who had a long-term horizon and others who could overlook the volatility of the moment, we made purchases during the pullback and were rewarded with solid returns.
However, for most of our clients, the seven-week rally essentially undid the pullback of the last five months.
Bitcoin:
Bitcoin experienced a significant pullback in early 2025, declining from approximately $102,000 to the low $80,000s by April. Over the past 60 days, it has surged to nearly $109,000, reflecting a year-to-date gain of about 3%. With potential policy support from the Trump Administration to promote cryptocurrency adoption, it could surge higher.
Disclosure:
Aurora Strategic Advisors is a Registered Investment Advisory firm. As a "fiduciary," we must do what is best for our clients and not have conflicts of interest without disclosing them.
Unlike many traditional brokers and financial advisors, we are required to disclose any conflicts of interest that may exist between us and our clients. As fiduciaries, we must always prioritize our clients' needs, as we can recommend a wide range of investments, including stocks, mutual funds, bonds, cryptocurrencies, Certificates of Deposit, insurance companies, annuities, and other suitable options.
We also work with several employers that offer 401(k) and company retirement plans, as well as other financial literacy and wellness benefits programs. It is vital to many investment committees and employers to know that their financial advisor has no conflicts of interest when working with their company and can create a customized program, rather than offering a cookie-cutter approach that is not unique to each company and its employees.
Some firms and individuals are not "fiduciaries. " As a result, they are not held to the same level of accountability by the SEC or the State of North Carolina when advising clients and employees of 401 (k) plans.
This report is based on a professional look ahead at the markets for our clients who have met with an investment advisor representative at our firm and had their particular investment needs and concerns analyzed. I created this report for clients only to give them a preview of what was ahead for the market. The goal of this report was to make new recommendations, changes, or deletions to a client's portfolios, as well as a preview of what I saw on a 6-month horizon.
However, I found the reports were shared with non-clients, so I issued a detailed report to our clients and a summarized version to the general public. The content was also released with additional disclosures.
Since I am not familiar with non-client portfolios or non-client investment risks, I advise them to consult with a financial advisor or schedule a free consultation with our office before taking any action based on this report.
When acting independently, consider your time horizon, investment risk level, political and market risk conditions, tax implications, and sector research to ensure comprehensive due diligence.
This report is not designed for day trading or short-term horizons. It is not intended to be relied on as a forecast, research, or investment advice, nor a recommendation, offer, or solicitation to buy or sell any securities or investment strategy. ASA and our clients hold positions in several of the stocks named in this report; however, we provide no investment advice to the companies mentioned in the report.
When I examine any trend, economy, or investment, I take a long-term view of our recommendations and their suitability for our clients.
Opinions are subject to change without notice and are not intended as investment advice or to predict future performance.
What is ahead for the Second Half of 2025?
Interest Rates: The Federal Reserve has consistently stated that it will wait for all data, and the impact of tariffs has caused it to delay any rate cuts. The firm's position is that the data was not strong enough in June to have the Federal Reserve cut rates at the July 28th-29th meetings.
Everyone is looking to the September 16th-17th meeting for the first rate cut by the Fed. The real question will be how much the Federal Reserve will cut and whether it will make moves during the October and December meetings.
We expect a 25-basis-point cut in September and, depending on the data, possibly one more in either October or December. We expect they will wait and cut an additional 25 basis points in December, leaving rates alone in October.
The New Tax Legislation and Its Impact:
Over the last day, the Trump Administration received its new tax legislation and signed it into law on July 4.
Some provisions of the 2017 Tax Cuts and Jobs Act were set to expire at the end of 2025, but the new bill extends them.
- The SALT benefits increase to $40,000, effective in 2025.
- Workers will get to deduct $25,000 in tips and an additional $25,000 in wages.
- Some seniors collecting Social Security for 2025-2029 will be able to deduct their income from their taxable income.
- People over the age of 65 receive a $6,000 deduction, and those with an AGI under $75,000 ($150,000 for joint filers) will owe no taxes on their Social Security benefits.
How this will impact the economy and the US Markets is a question mark, and it will be something I will focus on for the first half of 2026.
The Economy:
The economy is strong as inflation declines and employment numbers stay at low levels. I mentioned in my first-half outlook that once a product reaches a specific price point during high inflation, it rarely returns to its former levels.
The firm expects declines in gas prices, as well as some groceries and other items. However, we don't anticipate a significant reduction in credit card rates, car loans, or mortgage rates. Higher prices in the auto and housing markets could offset any rate reduction. Additionally, we don't expect to see banks lower their credit card fees anytime soon. Currently, we are seeing some higher credit card rates in the outrageous range of 37% APR.
Bitcoin/Gold and all things speculative
Both Bitcoin and Gold are coming off solid gains for 2024. Bitcoin was up approximately 113%, and gold was second with a gain of about 28%.
In 2025, gold prices increased by about 35%, while Bitcoin prices rose by about 3%.
As I mentioned earlier in the report, Bitcoin struggled through the first half of 2025, reaching its lowest point in April. Since then, Bitcoin has been on an upward trend, driven by political and economic developments.
We added the newly minted iShares Bitcoin ETF (IBIT), which was finally approved by the SEC for January 2024, to client portfolios that met the suitability exposure. Since its inception, the fund is up about 67% and is up about 17% YTD.
I have seen a decline in the number of gold advertisements. I find it noteworthy to see commercials claiming the world is in a crisis, followed by a customer buying gold at the lunch table to ease their troubled mind. If everything is in such a crisis, would everyone gather around the lunch table, smiling and enjoying the benefits of the economy?
Gold has outperformed the S&P 500 over the past year; however, it has not outperformed it over the long term.
If you check the performance in the last five years, the S&P 500 has increased by 86.3%. On the other hand, gold has gained about 75% over the past five years. The Nasdaq has also outperformed gold. The Nasdaq has increased by approximately 100% over the past five years, according to data from Bloomberg for the period from 2020 to 2025.
The firm expects gold to have its place in a portfolio, and every investor should assess their unique situation and make a decision based on those factors.
We have observed several developments in the cryptocurrency sector. We anticipate that the SEC will eventually make significant changes to some of its guidelines. Following these changes, we expect major firms like Goldman Sachs, J.P. Morgan, and Morgan Stanley (with smaller firms to follow) to permit their brokers to recommend these types of investments to their clients.
The next shoe to drop will be the Department of Labor, which governs the 401(k)/403(b) market, allowing these types of investments to be held in retirement plans.
Considering these two factors, as well as the increasing number of companies directly buying Bitcoin. While speculative, we anticipate the price will surge to $150,000-$175,000 by the end of 2025, as I mentioned in my first-half outlook for 2025.
Fixed-Income/Bonds/CDs
There has been little change in this sector since we reported on the first half of the year. We still expect the fixed-income markets to struggle in the year ahead. We have seen CD rates decrease substantially nationwide. Earlier in the year, we were getting clients' CD rates of around 5.4% to 5.7%. Today, those rates are moving closer to 4%.
However, it is a significant issue for those seeking yields to help with income and competing against inflation. As we have mentioned to my clients, a 75-basis-point cut in 2025 will not impact the cost of everyday goods. We will not see a significant decline in bank rates on credit cards, car payments, or mortgage rates. It will take some time before those seeking income will see an uptick in interest rates on vehicles like CDs and savings accounts.
We want to reiterate this point.
Investors, please understand your APY (Annual Percentage Yield). If a person buys a 6-month CD with an APY of 5%, they do not receive the complete 5%; they would only receive 2.5%, which is half of the APY. The same is applied to a 9-month CD. Investors do not get 5%; they will get three-quarters of the APY.
I want to say this is a minor matter, but I disagree, as I hear from bank and broker customers who are constantly confused about buying CDs with terms of less than 12 months or greater than 12 months, thinking they are getting one rate when, in fact, they are not.
Second Half Outlook for 2025
We experienced a strong pullback over the last five months, but then had a strong recovery that occurred over seven weeks. In some ways, investors are either at their pre-pullback balances, slightly lower or higher, depending on the portfolio mix.
An investor should review and rebalance their accounts if they have a 401(k) or 403(b) plan. We have observed that when the market performs exceptionally well, investors tend to be less diligent than they should be, which can lead to surprises during a downturn or substantial losses that significantly impact their plans. I have seen this work against more employees who try to chase high returns, as they may face significant losses if market conditions shift.
We have taken a bullish view of this market since 2022, which has done well for our clients. We anticipate the S&P 500 could close around 6,950, a 12% increase, while the Nasdaq could close around 23,500, a 15% gain from current levels.
As we enter the second half of 2025, we are focused on five key components: the impact of tariffs, Federal Reserve Chair Powell's comments following each meeting, the $6 trillion sitting on the sidelines, the expansion of Artificial Intelligence into other industries, and the upcoming corporate earnings reports.
As mentioned in my first-half report. According to a report from CNBC, the United States has surpassed $1 trillion in credit card debt. As interest rates stay high, I am still concerned that the average credit card rate is approaching 26%, and delinquency rates are rising on vehicle loans and student loans. However, as long as consumers feel their employment is safe, we should see the delinquency rate stabilize and begin to decline.
We expect credit card interest rates to peak at 20% for those with average credit and to remain around 30% for those with challenging credit over the next few months. Should there be a slowdown in the economy, we could see banks take a hit as consumers struggle to pay their credit card bills and high-interest car loans.
As most of our clients are aware, we have avoided banks and insurance companies over the past four years. However, recent stress tests have made two banks look more attractive.
The firm is also concerned with the high rates of new and used cars in a sub-category. According to automotive researchers at Edmunds, the share of consumers who finance a vehicle with a monthly payment of $1,000 is nearly one in five car buyers. These aren't luxury cars; they're regular cars and trucks that consumers want.
A second factor I observe on a local level is car buyers seeking to purchase a new vehicle while still owing on their previous one. One client told me that they had bought a car three years ago and traded it in for a newer model. Her monthly car payment increased from $625 to nearly $775. The root cause is the $12,000 rollover from the old car loan. I hope this is not a trend occurring across the US.
The firm remains concerned about the state of the commercial real estate market. According to Fox Business, about $1.2 trillion in commercial mortgage debt is due by the end of 2025. Considering that rates have remained unchanged since last year, I expect the debt will not be refinanced due to higher costs.
Looking at the global economy from a broader perspective, we expected the Ukraine conflict to conclude by 2025. However, with continued attacks by both sides, we have revised our opinion that the war will continue through 2025.
However, as usual, we believe many opportunities will still be available to clients despite the static.
Many non-clients I've spoken with are hesitant to invest, fear market declines, or enter the market just before a downturn. According to PIMCO, approximately $6 trillion in cash is sitting on the sidelines, following the influx of about $1 trillion into the market in 2024, primarily into big technology, Bitcoin, and various cryptocurrency investments.
Over the years, investors stand at a crossroads, deciding whether to stay on the sidelines or enter the market.
The current market has demonstrated that patience is a key component to successful investing. If an investor did nothing during the first half, their portfolio declined, but it also recovered quickly.
If you rebalanced at the beginning of the year, as we suggested and did for our clients, an investor was sitting on some cash when the market hit lows in April, and some outstanding companies became less expensive.
As we mentioned earlier, recommending the sale of a position doesn't mean we dislike it. It's typical for us to rebalance an investment or take some profit off the table. It's prudent and, in some cases, just wise.
However, any pullback or decline can represent an opportunity to re-enter if the fundamentals remain intact. We had such an opportunity after all the tariff news caused the market to decline from January through April 17.
We will continue monitoring various investments and our current holdings as we progress. I have spoken to some of you about these recommendations, and where it is appropriate, we have recently started adding new positions to client accounts. While there are no deadlines to add or delete positions, some make sense in the short term.
The firm expects this current bull market rally to have begun around late September 2022. Many investors are pleased with the returns from their investments in 2025, provided they were in the correct funds or individual stocks. Some investments are still negative in 2025, but the outlook is more positive.
As we approach the second half of 2025, I see several favorable conditions for a strong finish to the year.
As we closed corporate earnings in the first half of 2025, most companies provided positive quarterly reports, but some declined to offer future visibility due to the uncertainty surrounding tariffs. Overall, I expect the remainder of 2025 to be favorable, with earnings exceeding expectations.
As the new corporate earnings season begins next week, with the banks as the leadoff hitters, the firm anticipates good to strong earnings from companies for the remainder of 2025.
We heard from Delta today, and while its US markets look stable, they are still seeing strong demand in international and premium seating. The earnings reports from airlines, travel, and banking will provide us with a more in-depth view of consumers and their opinions on the state of the economy.
Another positive development is the market's broad scope. For several quarters in 2023 and 2024, the market performance was very limited in scope and was led by a small group of stocks that inflated the indexes to positive returns.
We have observed an expanded breadth across various sectors, as well as a recovery in the Magnificent Seven and sectors like banking and discretionary that did not participate in 2024.
We expect to see the expanded impact of AI on various industries, such as banking, consumer staples, and defensive stocks. We anticipate further cost savings and employee reductions over the next three years, making these new sectors more attractive.
In early 2025, we added Shopify, J.P. Morgan, Coinbase, Super Micro, Rigetti Computing, and Boeing. In the second half of 2025, we have about six new positions on our radar and will engage with clients as we move through the summer.
We mentioned this in my first half report and have discussed quantum computing with some clients, explaining what it is and why it is receiving increased coverage in cable and media.
The quantum computing sector is in its infancy, and we would liken it to an emerging country. There is tremendous upside, but there is tremendous risk.
We anticipate that quantum computing will be the next significant advancement in technology. I am hedging my position and selecting IBM, Rigetti, Oracle, and IONQ as the major players in the development stages. Still, I believe Amazon and Google will round out the top companies.
For some of the smaller companies (RGTI, IONQ), we are approximately 3-7 years away from these companies generating a profit and could also be potential takeover targets by larger companies to reduce the time spent on R&D. Investing in this type of stock will require considerable patience.
According to engineers at Amazon, Google, and even the quantum computing companies themselves, it could be between 2030 and 2033 before the benefits or applicability of this technology become evident.
We are still seeing new life returning to semiconductor names like Broadcom, Marvel Technology, Applied Materials, and Lam Research. We have seen major firms, such as Goldman Sachs and Cit, adding them to their top focus list upon further demand from US customers.
In addition, I recommend that we add some of our core holdings, such as GE, AMD, Snowflake, Google, Iron Mountain, Marvel Technology, Vistra Energy, Palantir, Constellation Energy, Boeing, and J.P. Morgan.
What are our "Core Holdings"? These are investments that we have been in for years. You can hold these positions for long durations and be rewarded for such names.
For example, we started buying AMD in 2016 when investors thought they would never overtake Intel. Clients who owned AMD back then owned the stock at around $10 a share, which was up around 900% during the period.
Depending on when a client joined our firm, they may hold investments in companies such as Tesla, Square, Netflix, Salesforce, Microsoft, GE, Meta, ELF Beauty, Exxon, Marvel Technology, Boeing, Palantir, Iron Mountain, First Trust Water ETF, Nvidia, TFI International, Vulcan Materials, and American Water Works, among others. If you joined more recently, you may notice that you don't own all these names due to a high valuation, a change in the sector, or the time was not right to enter the stock.
In addition to the stock positions named above, we believe in diversity. We hold different ETFs, Mutual Funds, CDs, Treasuries, and some corporate debt to bring additional balance to client portfolios.
As for new additions to client portfolios:
Oracle (ORCL) offers integrated suites of applications, along with secure, autonomous infrastructure, in the Oracle Cloud. The company's segments include cloud and license, hardware, and services. The cloud and license segment markets sell and deliver a broad spectrum of enterprise applications and infrastructure technologies through their cloud and license offerings. The hardware segment offers a comprehensive range of enterprise hardware products and software solutions, including Oracle Engineered Systems, servers, storage, operating systems, virtualization, management, and other related software and hardware support.
Coinbase (COIN) is a holding company of Coinbase, Inc. and other subsidiaries. The company provides a platform that enables its users to engage in various activities, including discovering, trading, staking, storing, spending, earning, and utilizing their crypto assets. The company offers a suite of products and services that are designed to meet the distinct needs of its three customer groups: consumers, which includes individual retail user customers seeking to discover or trade crypto assets and engage in on-chain activities; institutions, which are businesses that include market makers, asset managers, hedge funds, banks, wealth platforms, registered investment advisors, payment platforms, and public and private corporations; developers, which comprise of developers, creators, merchants, crypto asset issuers, organizations and financial institutions, and other groups building decentralized protocols, applications, products, or other services on chain.
Rigetti Computing (RGTI) is a full-stack quantum computing company. The company operates quantum computers over the cloud and serves global enterprise, government, and research clients through its Rigetti Quantum Cloud Services platform. The company's quantum-classical infrastructure integrates high performance with public and private clouds for practical quantum computing. It has developed a multi-chip quantum processor for scalable quantum computing systems. Its machines can be integrated into any public, private, or hybrid cloud through the Company's Quantum Computing as a Service (QCaaS) platform. It also sells quantum processing units (QPUs), custom computing components, development contracts, and other services. Don't let the price surprise you, $7.58.
Super Micro (SMCI) develops and sells high-performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. It offers a range of IT solutions, including complete servers, storage systems, modular blade servers, blades, workstations, full-rack scale solutions, networking devices, server subsystems, and server management and security software. It provides its products to enterprise data centers, cloud computing, artificial intelligence, 5G, and edge computing markets.
We don't believe in timing the market; that is a losing prospect. So, instead, we focus on our mantra of researching stocks, sectors, and overall market conditions before committing. Hence, the discipline to stay patient and allow the opportunity to meet your conditions overrides the temptations of buying just to be buying.
Several mutual funds and ETFs are on my radar, but I can address those with clients directly.
The list contained in this report is limited, and some items do not apply to every client; I will discuss them with those clients individually.
I must stress to any non-client looking at these positions. The recommendations are incomplete, and this is not a solicitation for these holdings. I can assure you they will change throughout the year. Please consult with a financial advisor or schedule a free, no-obligation appointment with our office. Always conduct your due diligence before investing.