What Investors Can Expect In The First Six Months

Six months in the stock market is a blip. The first half of 2025 promises to be different, due to the beginning of Donald J. Trump’s second term as president and the many changes he’s promised—looser regulations, mass deportations and tariffs. Then, there’s the Federal Reserve, whose announcement December 18, 2024 tanked the market; more Fed announcements are coming in 2025. In this article, I discuss what may be ahead with economic indicators, sectors, global market influences and market volatility.

Why It’s Important To Analyze The First Six Months

Looking at the first half year is a way of taking a measure of where the country and you as an investor might be headed.

January through June of any year is when economic trends, policy changes and corporate strategies begin to reveal themselves and it’s also when many investors adopt a clean slate with renewed discipline. “It’s during this time that investors should lay the foundation for the rest of the year by planning accordingly,” Rob Edwards of Edwards Asset Management, told me.

Robin Giles, CFP at Apex Wealth Management in Katy, Texas, told me that Trump could bring on new economic policies and changes to the tax code. “The first six months will be a good indication of what policies are likely to be put in place versus those that turn out to be campaign promises and political posturing.”

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Key Economic Indicators To Watch In 2025

One important economic touchstone is Inflation. On December 18, Fed Chair Jerome Powell said the Fed is trying to tamp down inflation with fewer interest rate cuts in 2025 than originally planned. Inflation and employment rates, tied to consumer spending, are also key indicators.

Inflation Trends And Fed Policy

“Interest rates are like gravity. If they are higher, they pull down economic growth (via higher borrowing costs) and equity valuations,” Jason Ware, chief investment officer of Albion Financial Group in Salt Lake City, told me. In such an environment, the competition for dollars is tight when allocating assets.That’s because higher yields are stronger competitors against stock volatility and risks, he added. “In a nutshell, those are the key reasons why interest rates and, thus, Fed policy matter,” said Ware.

Powell surprised the market in December by saying the Fed would have two rate cuts, not four, in 2025 because inflation is hanging on and the agency wants to corral it. That sent the market tumbling down; the Dow Jones Industrial Average plummeted by more than 1,100 points. Powell originally said the Fed wouldn’t cut the interest rate until inflation fell to 2%. It…