Investing

President Dwight Eisenhower is often quoted as saying “what is important is seldom urgent and what is urgent is seldom important.” This perfectly captures the challenges many investors face, since it often feels as if every breaking market and economic development is urgent and requires immediate action.

On the surface, the first half of 2025 has been challenging for investors. From a trade war and market correction to an escalating Middle East conflict and concerns over the growing national debt, investors may feel as if financial markets are stumbling from one problem to the next.

The conflict between Israel and Iran has captured global attention and created uncertainty in financial markets. Israeli strikes on Iranian nuclear facilities and military targets began on June 13 and quickly led to retaliatory attacks. Then, on June 21, the U.S. launched strikes on Iran's nuclear facilities.

Moody's recent downgrade of the U.S. credit rating marks an official end to the country’s top-tier debt status. Following Fitch's downgrade in 2023 and Standard & Poor's move in 2011, Moody's decision to lower the rating from Aaa to Aa1 underscores growing concerns about the nation's fiscal trajectory.

The recent trade announcement between the U.S. and China reverses many of the tariffs that rattled financial markets beginning in April. This agreement, which lasts 90 days, lowers U.S. tariff rates on China from 145% to 30%, and China’s rates on U.S. goods to 10%.

Just like in the stock market, greater uncertainty has led to swings in the bond market. These moves, driven by tariffs and a dispute between the White House and the Fed, have pushed interest rates and bond yields higher.

Federal Reserve policy has been a key driver of markets over the past few years. It’s not surprising to investors that changes in policy direction have resulted in market swings, most notably in 2022 when the Fed began to hike rates, and again last year when investors anticipated Fed rate cuts.

When it comes to financial planning, it's important to recognize what we can and cannot control. We can control our own behavior, make thoughtful financial plans, and adjust our strategies as needed. However, we don't control the economic cycle, market movements, or policy decisions that impact the broader financial landscape.

Investor concerns over the recent underperformance of technology stocks have raised questions about the broader stock market. While strong returns among artificial intelligence stocks have supported portfolios over the past few years, they have also raised questions about the sustainability of the market rally.

Investors have faced several market concerns early in the year around tech stocks, interest rates, and government policy. Among these factors, it’s no surprise that trade policy has emerged as particularly significant for markets.

President Trump’s inauguration marks a significant political shift amid market and economic uncertainty. The stock market had rallied as much as 5.3% with dividends in the month following the November election, before giving up about half of those gains at the start of the year.

The start of the year is the perfect time to prioritize both personal and financial well-being. While physical health often takes center stage in New Year’s resolutions, financial fitness deserves equal attention. This is especially true after two years of strong market returns and changing economic conditions.