Greetings from Integrity Wealth Advisors. We hope you are enjoying the fast-fleeting days of summer and quality time with family and friends. One of the early summer activities every year for the entire Integrity organization is our charitable golf tournament. We had another successful event this year and raised $65,000 for Crossfire Ministries. A warm thank you to all of you who supported the tournament as a sponsor and/or a player. The Integrity volunteer team knocked it out of the park again led by Larry Dozier, Gena Holbeck, Jaime Gibson, and Anna Fry.
Markets Advance to Record Highs Amid Policy Shifts and Geopolitical Complexity
Tariffs, Middle East tensions, a mixed US economy, a falling US dollar, and a slowpoke Fed. Despite the rain, the global markets sang and danced their way to an impressive quarter of performance. The stock markets experienced a stunning rebound with many indexes finishing at new all-time highs. Market resilience in the face of this year’s volatility underscores the importance of staying strategically invested, especially in environments where headline risk can mask long-term opportunity.
Market strength was broad-based, with gains across regions, sectors, and asset classes. International equities have been notable outperformers in 2025, aided by dollar weakness. While small-cap stocks remain under pressure—down 2.5% through the end of the quarter—larger, globally diversified companies have led the way.
Within the S&P 500, Technology rebounded sharply, contributing significantly to index gains. Industrials (+11.4% YTD), Communications (+10.2%), and Financials (+7.5%) also delivered strong results, while Healthcare and Energy underperformed.
Fixed Income: Quiet Contributor, Critical Role
Amid equity market volatility, fixed income played a stabilizing role. Corporate bonds, Treasuries, and high-yield credit all ended the quarter in positive territory, supported by attractive yields and narrowing credit spreads. Though short-term dislocations occurred during the tariff selloff, high-quality fixed income continued to demonstrate its value in portfolio construction, particularly for investors seeking income and downside protection for equities.
Currency Moves Favor Global Exposure
The U.S. dollar declined steadily through Q2, which—while challenging for domestic purchasing power—provided a tailwind for U.S. exporters and global equity exposure. For U.S. investors in non-hedged international investments, this enhanced returns. While the dollar is approaching the low end of its recent range, it remains historically elevated, suggesting room for further mean reversion.
The Fed Holds Steady, Outlook Becomes More Nuanced
The Federal Reserve maintained its policy rate between 4.25% and 4.5% throughout the quarter, adopting a wait-and-see stance amid a mixed economic picture. Inflation forecasts were revised modestly higher, with policymakers now projecting 3% in 2025 and a return to the 2% range by 2027. Growth expectations were trimmed to 1.4% this year, reflecting the anticipated drag from tariffs and policy uncertainty.
Storm Clouds Dissipate
Like ominous skies that deliver only gentle rain, there were at least three significant incidents during the quarter that ended with little to no negative impact on the markets.
- Geopolitical Flashpoints: A Reminder of Global Risk
The brief military exchange between Israel and Iran in June added complexity to an already fragile global landscape. While a ceasefire was quickly reached, the episode reminded investors that geopolitical risk remains an ongoing consideration in portfolio diversification—especially for those with concentrated exposures or legacy assets tied to specific regions. - Fiscal Policy and Credit Quality in the Spotlight
Moody’s downgrade of the U.S. credit rating revived concerns around long-term fiscal sustainability. With national debt now exceeding $36 trillion and future deficits projected to rise, credit markets are watching closely. However, history shows that markets have proven adaptable to fiscal episodes, particularly when underpinned by strong institutional frameworks and global reserve currency status. - 2016 Tax Cuts Extended
In his first term, President Trump’s signature legislation cut income tax rates meaningfully but were set to expire at the end of 2025. With the slimmest of majorities, President Trump was able to hold his Republican coalition together and pass new tax legislation which was signed into law July 4 extending those 2016 tax cuts. The financial markets could have reacted quite negatively if the tax legislation had been derailed.
Overshadowed by all the headline commentary, one outcome of the One Big Beautiful Bill Act (OBBBA) is that it increases the debt ceiling by $5 trillion. Therefore, the seemingly perennial fight in Congress over raising the debt ceiling has been sidelined for the near future, projected to be on the backburner until 2028.
For any investor, the events of the second quarter reaffirm a timeless principle: financial success is built on proper planning, intentional diversification, and disciplined execution no matter the proverbial storms that will come and go in the worlds of geopolitics and global finance. Thank you, clients and friends, for the opportunity to serve you.
Please let us know if you have any questions, and enjoy the rest of your summer.
The Integrity Team
