The VIX reflected this volatility, spiking 312.4% in early April before declining -72.5% to finish near January lows. Large-cap stocks led the recovery, while small-caps remained weak as uncertainty around interest rates and consumer health weighed on these names.
Beneath the surface, economic data painted a mixed picture. Inflation maintained its downward trajectory—core CPI hit 2.8% year-over-year in May and US PCE 3-month annualized fell to 2.7%—even as tariff concerns loomed. The labor market showed cracks, with unemployment rising to 4.2% and continuing claims reaching 1,974k, the highest since 2021, though levels remain historically low. Consumer spending weakened, falling -0.1% year-over-year in May below expectations, likely reflecting demand pulled forward ahead of anticipated tariffs.
These crosscurrents create a delicate balancing act for the Federal Reserve, which held rates steady at 4.25-4.50% in June while markets price in 65 basis points of cuts for the remainder of the year.
Alternative assets stole the show, with gold continuing its climb higher while Bitcoin rebounded from 1Q reaching a new all-time high in May.
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The Nasdaq Composite rebounded strongly, posting the best performance in the quarter, gaining 18.0% followed by the S&P500’S 10.9% return and the Dow Jones Industrial Average’s 5.5% increase. Eight out of the eleven sectors in the S&P500 posted positive returns for the quarter. Information Technology and Telecommunications led the market with returns of 23.7% and 18.5%, respectively. Despite the rising geopolitical conflicts, Energy was the worst performer, declining 8.6% in the period followed by Health Care’s decline of 7.2%.
Despite declining the most in 1Q, small-caps rebounded the least in 2Q, climbing 8.5% and underperforming both mid-cap and large-cap returns. The Russell 1000 gained 11.1% while the Russell Mid-Cap Index posted returns of 8.5% followed by the Russell 2000’s gain of 8.5%. Growth regained the lead, materially outperforming value with the Russell 1000 Growth Index rising 17.8% while the Russell 1000 Value Index returned 3.8%.
Bonds were mixed in the quarter. The US 10-year Treasury yield ended the quarter largely flat despite climbing to a high of 4.6% in May. US Corporates provided positive returns in the quarter with the Bloomberg Aggregate returning 1.2% while long-dated US Treasures gave back some ground, declining 1.9% in the quarter.
The US Dollar continued its decline, falling 7.1% in the quarter while Gold gained 4.6%. West Texas Intermediate (WTI) crude fell -9% in the quarter bringing its year-over-year return to -20%. Bitcoin rebounded in the quarter, gaining 30.6% reaching an all-time high in May at $111.0k and ended the quarter at $107.6k.
Data sourced by Bloomberg. Index data as of 6/30/25.
The S&P 500 Index is a market capitalization-weighted index of 500 widely held common stocks. Investors cannot invest directly in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. The Dow Jones Industrial Average (DJIA) is an unmanaged index composed of 30 blue-chip stocks, each with annual sales exceeding $7 billion. The DJIA is price-weighted, reflects large-cap companies representative of U.S. industry, and historically has moved in tandem with other major market indexes, such as the S&P 500. The NASDAQ Composite Index is a market capitalization-weighted index that is designed to represent the performance of NASDAQ securities and it includes over 3,000 stocks. The Russell® 2000 Index is a small-cap stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. The Russell Midcap® Index, an unmanaged index, measures the performance of the 800 smallest companies in the Russell 1000 Index. The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Russell 1000 Growth® Index measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value® Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Bloomberg US Treasury: 20+ Year Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury with 20+ years to maturity. The Bloomberg USAgg Index is a broad-based flagship benchmark that measures the investment grade, US dollar- denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency). West Texas Intermediate (WTI) Crude Oil is the underlying commodity of the New York Mercantile Exchange's oil futures contract and serves as one of the main global oil benchmarks. CPI: Consumer Price Index measures the monthly change in prices paid by U.S. consumers. PCE: Personal consumption expenditures includes a measure of consumer spending on goods and services among households in the US. PCE, CPI, and inflation rates based on available data at the time the piece was written and are not guaranteed to stay the same in the future.
The views expressed in this commentary reflect those of Patient Capital Management analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Patient Capital Management disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
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