Written by Erik Laymon, Portfolio Analyst
June 30, 2025

Align’s Mid-Year Market Update

Greetings from Align’s Investment Team! As we roll through 2025, we know the financial markets can feel like a rollercoaster. Between trade policy twists, inflation turns, and a U.S. economy that rises tall and strong, there is a lot to take in. That’s why we are here— to lean into the latest insights from Wall Street and give you the best insight we can offer. Here are our latest takes and how we are keeping portfolios on-track for retirement savers and spenders.

What’s Happening in the Markets

You may have caught wind of the trade tensions making headlines, especially between the U.S. and China. With tariffs climbing—hitting around 55% on Chinese imports (the highest since the 1930s per Investopedia), the S&P 500 has had a bumpy ride up to this point. It dipped in April but bounced back by June, topping 6,000 points for the first time since February. That’s a win worth celebrating but could portend a near-term pullback.

Inflation has been cooling off a bit, which is a welcome change of pace. It dropped from 3.5% in April to 2.4% in May according to the U.S. Bureau of Labor Statistics. This means that prices are a little easier on your wallet, though inflation is still a bit higher than the Fed’s 2% target. The Federal Reserve is holding short-term rates steady at 4.25%-4.50% for now, while keeping an eye on how trade policies play out.

Corporate earnings are still a bright spot for economic health too. The S&P 500’s big players, such as those called the “Magnificent 7” tech giants, posted double-digit growth last quarter. This quarter is looking a bit slower, but solid nonetheless, even with trade uncertainties in the mix.

That being said, we believe that the U.S. is in the middle of a 6–9-year business cycle, under this mix of easing inflation, potential rate cuts, and a strong domestic economy against the rest of the world.

How Markets Are Performing

Big U.S. companies such as those featured in the S&P 500 are delivering returns that are beating long-term expectations. Meanwhile smaller firms, tracked by the Russell 2000, have had a tougher go this year, but we are seeing hints of a comeback in small-mid cap value and associated dividend-paying stocks. That could mean some exciting opportunities ahead for some of our active managers.

On the bond front, yields on the Bloomberg US Aggregate Bond Index have dipped slightly, boosting the value of existing bonds. It’s a nice perk for those who are living on income, offering both growth and steady income.

What It Means for You

We hope we have your attention because we are paying attention! Your retirement savings need to last and keep up with life’s challenges. With inflation easing to 2.4%, your money’s holding its value better, though we’re still aware that it’s above the Fed’s target. The U.S. economy’s strength gives us a solid base to invest confidently, but trade uncertainties mean we’re staying sharp.

Here is what we are watching: beyond the tech giants, value and dividend stocks are starting to perk up, offering reliable income for income generation. Bonds, with their appealing yields, are like a trusty sidekick to the stocks in your portfolio—they help to smooth out stock market jitters while keeping cash flowing. A classic stock-bond mix such as a 60/40 or 70/30 continues to be a great way to balance risk and keep your retirement dreams on course.

What We Are Doing

Your Align team has your back. We are always planning ahead to make the most of this market while keeping risks in check. Right now, we are big fans of large, high-quality U.S. stocks—those with strong balance sheets and steady dividends. These are the rock-solid companies that can handle some of the trade or economic curveballs coming their way.

For bonds, we are sticking with short- to intermediate-term, top-notch options to lock in good yields without over-reaching risk. Moreover, we are maintaining our model portfolio’s stake in a “multi-alternative strategy” – a mix of customized investments that work together to smooth out returns and add extra diversification.

We are all about balance, blending stocks and bonds as well as diversifying across asset classes within each to shield against losses and tackle inflation. This is at the core of Align’s investment philosophy. If you have some idle cash sitting around, let’s chat with your advisor about putting it to work!

The Bottom Line

Our stock and bond markets are a mixed bag—trade hiccups and policy shifts are real, but the U.S. economy’s resilience, cooling inflation, and strong earnings keep us cautiously optimistic. We are standing by to navigate this complexity, focusing on quality income, asset class diversification, and smart moves to maintain a patient, long-term approach to managing risk.

So, kick back and enjoy retirement— let us worry about the financials. With a little teamwork and the right plan, we can help you live the best life before, during and after retirement.

P.S. Got questions? Want to talk about your portfolio? We’re just a call or email away. Reach out anytime!

*Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.