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Market View: June 2025

By Charlotte Spiegel on June 11, 2025

Expect the Bull Market to Continue

Despite continued uncertainty, economic, technical, sentiment indicators, and valuation support a continuation of the bull market.


Technical Indicators

The S&P 500 is up about 7% since the last Market View was published in early May. The May Market View said “the correction has been different… it has not been caused by a structural issue… That has made it difficult for most strategists and economists to determine what to do with investment portfolios based solely on the trend in economic data… In times like this, it becomes more important than usual to watch stock market signals… It is starting to look like we are on step 4 (breadth thrust and new bull market).”

That continues to be the case today.

Ned Davis Research (NDR) follows 12 different breadth thrust indicators (an indicator that determines market momentum.) On May 5, five out of 12 hit positive triggers. Currently seven out of 12 have hit positive triggers in the last two months. Historically, five indicators have been hit within two months 28 times since 1980. A year later, the S&P 500 is positive in all 28 cases, and is up an average of 21.52% over the next year.

Fig. 1: S&P 500 Index vs. # Thrust Indicators Fired (Signals Repeated 63 Days)


Sentiment Indicators

Sentiment data aligns with breadth data. According to the Conference Board Consumer Confidence Survey, 44% of investors expect a decrease in stock prices over the next year. According to NDR, since 1987, the stock market gains 13.46% annually when over 32.5% of those surveyed expect a decrease in stock prices over the next year. Levels of high pessimism usually indicate the market is at or near a bottom and ready to recover.

Investors are somewhat pessimistic about bonds too.

Fig. 2: U.S. Treasury Bond Futures vs. NDR Daily Bond Sentiment Composite

Fear that tariff wars will a.) potentially increase inflation and b.) potentially cause sovereign countries to sell U.S. bonds could be contributing to this fear.

a.) Inflation is on a downward trajectory. Both core and headline inflation is under 3%.

Fig. 3: U.S. Consumer Price Inflation (% 1YR)

Tariffs are likely to be much smaller than originally expected, keeping supply push inflation pressures minimal. With the Federal Reserve likely to keep interest rates in 4.25-4.5% range until October, inflation is likely to stay on a downward trajectory.

Fig. 4: Current Probabilities Across All Meetings and Possible Outcomes (BPS)

b.) The fear that China, Europe, or others would sell U.S. debt to buy other sovereign debt as a retaliatory measure to tariffs is unlikely. The global investment grade sovereign debt total, excluding China and the U.S., is $35 trillion. The U.S. has $36.2 trillion of outstanding sovereign debt. Moreover, the U.S. is the most liquid market, with average daily trading volume of around $500 billion. There are very limited alternatives for sovereign countries to invest money virtually risk free. Even so, in theory, diverting money away from the U.S. to other countries would drive other countries’ yields down, creating opportunity to buy U.S. debt at a higher yield. Investors would then arbitrage the higher yielding U.S. debt, bringing the yields back down in line with other countries.

Sentiment about the president also remains low. However, when it is between 35 and 50, the market tends to advance 11.88% a year. Bull markets often need a “wall of worry” to climb. Once investors have limited fear, all the good potential outcomes are priced in, leaving the market vulnerable to negative events.

Fig. 5: S&P 500 Index vs. Gallup Poll Presidential Approval Rating


Valuation

The S&P 500’s Price-to-Earnings ratio has come down. The Roundhill Magnificent Seven ETF’s (MAGS) Price-to-Earnings ratio has come down even more dramatically. The stock market doesn’t look cheap, but it is not expensive either. If the economy grows, as investors expect, earnings will continue to go up, supporting stock prices.

Fig. 6: S&P 500 ETF Trust (SPY-USA): 06/09/2020 to 06/09/2025


Economic Indicators

The U.S. stock market was in a downtrend from mid-February to mid-April. Uncertainty about what tariff policy would ultimately be, and uncertainty about what effect they would have if they were implemented was the cause for much of the sell-off.

Fig. 7: SPDR S&P 500 ETF Trust

During this time, it is likely corporations and individuals were more cautious with their investment and spending. The stock market drop reflected this. Therefore, it would not be surprising to see some soft and hard economic data be a bit weaker in the month or two ahead. Much economic data, however, is backward looking. A lot of that weakness may have been priced in already.

Investors are looking now six months to a year in advance trying to predict the direction of the economy. The technical indicators in the first section indicate investors expect the economy to grow, along with corporate earnings, even if there is a soft patch in the coming months.

Coming into the year, economic data was strong, indicating the economy is likely to remain resilient. For example, there remains 1x the number of job openings per unemployed. That is above historical averages.

While it is more likely than not the worst is behind us, and we may be entering a new bull market, it is unlikely to be a straight line. Expect continued volatility as investors digest economic developments born from current economic policies, or as economic policies shift. Again, this volatility is due to fast-changing economic policy, which can be interpreted by investors either positively or negatively and is somewhat unknown.

The true effects of the current or future economic policies, both short-term, and long-term, are still uncertain. Having said that, most bull markets occur when there is a “wall of worry,” as we have now.

Once there is no worry, and investors are complacent, as they were at the beginning of 2025, stock markets are ripe for correction. Until then, barring anything that is negative and unexpected, indicators suggest the direction is more likely to be up than down from here.

Fig. 8: Wage Growth Tracker vs. Job Openings per Unemployed

Instead of going through a myriad of other economic indicators, one can simply look at NDR’s economic timing model, which consists of 27 different economic indicators, and is correlated with economic growth. It is in the moderate growth zone.

Fig. 9: NDR Economic Timing Model – Mode Basis


Sources:

Fig. 1: Ned Davis Research, Inc. © 2024 on 6/9/2025

Fig. 2: Ned Davis Research, Inc. © 2024 on 6/9/2025

Fig. 3: Factset, Argent Wealth Management, LLC © 2024 on 6/9/2025

Fig. 4: Factset, Argent Wealth Management, LLC © 2024 on 6/9/2025

Fig. 5: Ned Davis Research, Inc. © 2024 on 6/9/2025

Fig. 6: Ned Davis Research, Inc. © 2024 on 6/9/2025

Fig. 7: Factset, Argent Wealth Management, LLC © 2024 on 6/9/2025

Fig. 8: Ned Davis Research, Inc. © 2024 on 6/9/2025

Fig. 9: Ned Davis Research, Inc. © 2024 on 6/9/2025

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