Schwab 2025 Market Outlook: Tariffs, Volatility Shape Investment Landscape

WESTLAKE, Texas--(BUSINESS WIRE)-- The Schwab Center for Financial Research (SCFR), which provides top-quality research, timely market insights and practical guidance for investors, today released its 2025 mid-year outlook, Schwab Market Perspective: 2025 Mid-Year Outlook, which delivers insights on the most important market and economic trends that investors should consider for the second half of the year.

The Schwab Market Perspective: 2025 Mid-Year Outlook provides perspectives on U.S. stocks and the U.S. economy, fixed income, and international stocks. SCFR also released its 2025 Wealth Management Mid-Year Outlook, which provides guidance on how investors can keep their wealth management plan on track for the rest of the year.

U.S. Stocks and Economy Mid-Year Outlook

“The U.S. economy faces a confluence of challenges in the latter half of 2025. Tariff-induced inflation, fiscal imbalances, and signs of labor market cooling contribute to an environment of heightened uncertainty and instability. In turn, with stocks nearing all-time highs as we put this report to bed, the bar is relatively high for the market in the second half of the year. Much has to go right with tariff rates edging lower, the labor market stabilizing, and inflation remaining under control. We think those are possibilities, but we also have low conviction in understanding (let alone predicting) where the day-to-day news flow will take us. For now, investor sentiment and positive earnings growth are supports, whereas stretched valuations and growth-negative tariff policy are hindrances. Investors should continue to embrace diversification across and within asset classes, especially given the dominance (this year) of markets outside the United States.”

Liz Ann Sonders, Chief Investment Strategist, and Kevin Gordon, Senior Investment Strategist, Charles Schwab & Co., Inc.

Fixed Income Mid-Year Outlook

“Coming into 2025, the one thing we felt confident in forecasting was ongoing volatility in the fixed income markets. We have not been disappointed with that call. Bouts of volatility may continue in the second half of 2025 as bond market investors navigate evolving tariff policy, U.S. government debt, and economic uncertainty. We continue to suggest taking a cautious stance in the markets but also favor taking advantage of times when yields rise to potentially capture attractive income over the intermediate term.”

Kathy Jones, Chief Fixed Income Strategist, Charles Schwab & Co., Inc.

International Stocks and Economy Mid-Year Outlook

“Uncertain U.S. policy and lagging U.S. stock performance has prompted investors to look overseas for opportunities. The first half of 2025 is a case study on why investors should consider international diversification as a way to manage market volatility. The second half of the year may see volatility and the international stock market leadership we had forecast in our 2025 Market Outlook could remain a trend.”

Michelle Gibley, Director of International Research, Charles Schwab & Co., Inc.

2025 Wealth Management Mid-Year Outlook

“2025 so far has been bouncy. A new administration, new tariff policy, and markets that have dropped then bounced back up. Let's hope the recovery trend continues. But are you positioned for whatever comes if it does not? We believe having a plan that considers opportunities, as well as risks, focused on your personal time horizon, tax situation, concerns about inflation, and other factors is the path to confidence, and wealth.”

Rob Williams, Managing Director of Financial Planning, Retirement Income, and Wealth Management, Charles Schwab & Co., Inc.

Learn more about the Schwab Center for Financial Research’s 2025 Mid-Year Outlook here and 2025 Wealth Management Mid-Year Outlook here.

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Disclosures:

Some of the statements in this document may be forward looking and contain certain risks and uncertainties.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned are not suitable for everyone. Each investor needs to review each transaction for their own particular situation.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk, including loss of principal. International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.

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