Markets process new tax cuts and tariff tensions resurface
Taking a closer look…
- Markets continue to digest the newly signed package of tax and spending cuts. There is a lot of discourse on how the budget reconciliation bill may affect national debt, but it will take years to measure the actual impact.
- Using history as a guide, stocks have risen through national debt concerns for decades. Higher national debt could lead to shifts in taxes, interest rates, and government services.1 Staying invested may help investors better adapt to these changes.
- In the near term, these tax cuts for individuals and businesses may help modestly bolster economic growth. Read more about the bill here: “What's inside the new tax act?”
- The administration set a new date of August 1st for tariff negotiations. Uncertainty caused by tariffs may worry investors and small-business owners, who have been less optimistic on their outlook for business conditions.2
- Nevertheless, markets have continued to rise. In fact, the S&P 500 Index has climbed about 25% from the tariff volatility lows of early April, amidst a slew of tariff headlines.3 This suggests that timing the market based on headlines may not be effective.
- Meanwhile, the job market has remained resilient. Jobless claims came in lower than expectations last week and remain below the historical average.4
Portfolio Manager, Strategic Advisers
"Despite uncertainty stemming from tariffs, international stocks have outperformed US stocks in the first half of 2025.5 These stocks likely benefited from improved earnings, attractive valuations compared to US companies, and a weaker US dollar. International valuations remain appealing even after this latest rally. Therefore, we believe international stock returns may have further room for growth as the year progresses."
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For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.