The second quarter brought another eventful period for investors. Daily developments in the Middle East continued to keep markets on edge, SpaceX successfully completed a record-setting IPO, and Kevin Warsh chaired his first Federal Reserve meeting after taking over from Jerome Powell. Despite some negative headlines, markets stabilized during the quarter and gradually shifted their focus away from energy supply concerns and back toward artificial intelligence, corporate earnings, and the broader growth outlook.

Markets entered 2026 with momentum, but Q1 ended on a much more cautious note. The U.S. market fell 3.96%, developed markets lost 0.94%, and emerging markets slipped 0.11% as late-quarter conflict in the Middle East shifted investor attention away from growth and AI enthusiasm and back toward inflation, energy prices, and risk management.

As we close out 2025, markets delivered a third straight year of double-digit gains, an impressive result given the volatility earlier in the year. In the fourth quarter, U.S. stocks rose 2.4%, while international developed stocks gained 5.2% and emerging markets rose 4.7%. The U.S. dollar also had a notably weak year, which boosted returns for investors holding international assets.

Markets delivered another strong quarter for investors, this time with very little volatility, a sharp contrast to the brief volatility spike back in April. Several major indices reached fresh all-time highs in Q3, continuing the momentum we’ve seen all year.

As we wrap up the second quarter of 2025, markets are showing surprising resilience, even amid ongoing uncertainty. Inflation stayed low, the labor market remains steady, and the passage of a sweeping new fiscal package is beginning to shape expectations.