Investment update Q2 2025
Market performance
North American stock indexes rallied to close out the second quarter at or near record highs, capping a volatile three-month stretch.
After suffering heavy losses in April, the S&P 500 and the Nasdaq were back at record-high closing levels by the final two trading days of Q2. The Dow remained slightly below its last record close from December 4, 2024, but the blue-chip index turned positive year-to-date in the final week of the quarter. Canada’s benchmark TSX, which outpaced its U.S. peers for most of Q2, cooled slightly in late June but had reached an all-time high as recently as June 12.
All told, it marked a remarkable rebound. On April 2, U.S. President Donald Trump signed an executive order imposing tariffs on more than 180 countries. The market responded with its worst two-day drop since March 2020, when COVID-19 sent global markets into freefall. The TSX, the Dow and the S&P 500 all declined more than 10% to enter a correction, while the Nasdaq fell into bear market territory (down 20% from its recent peak). U.S. stocks lost a combined US$6.4 trillion in market value as investors grappled with the possibility of stalled economic growth and a resurgence of rising inflation. On April 9, President Trump announced a 90-day pause, which allowed stock markets to begin recouping losses. When the quarter closed, the U.S. and China had agreed upon a “framework” for trade talks, and the U.S. and Canada set July 21 as a deadline for a new deal.
Though the trade war cooled, Middle East tensions continued to rise throughout the quarter, culminating in Israeli air strikes on Iran’s military and nuclear sites. The price of oil spiked as the U.S. joined Israel by bombing three Iranian nuclear sites, and Iran launched counterattacks. A fragile ceasefire appeared to be holding as the quarter drew to a close. Oil prices also started to decline as Iran opted for a pre-warned missile attack on a U.S. airbase in Qatar, but didn’t take action to disrupt oil supplies through the Strait of Hormuz.
Stronger-than-expected corporate earnings reports and resilient economic data, with inflation being the most important for investors, helped offset losses in Q2. The impact of tariffs and trade wars didn’t have the immediate shock that was initially expected, though investors could start to see that trickle through in Q3 as more data becomes available.
The stock and bond markets*
| Index | Close | Q2 | YTD |
|---|---|---|---|
| S&P/TSX Composite | 26,857.12 | 7.78% | 8.61% |
| Dow Jones Industrial Average | 44,094.77 | 4.98% | 3.64% |
| S&P 500 Index | 6,204.95 | 10.57% | 5.50% |
| NASDAQ Composite | 20,369.73 | 17.75% | 5.48% |
| 10-yr GoC Yield | 3.31% | 0.34% | 0.08% |
| 10-year U.S. Treasury Yield | 4.24% | 0.01% | -0.34% |
| WTI Crude Oil (US$/barrel) | $65.11 | -8.91% | -9.22% |
| Canadian Dollar | US$0.7349 | 5.74% | 5.71% |
| Bank of Canada Prime 4.95 % | |||
*Performance ending June 30, 2025. Sources: Bloomberg.
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