MAY 2025 Newsletter: Market Resilience Amid Uncertainty

The latest market recovery is another reminder that periods of turmoil can often create opportunities. Although stocks may pull back after their strong rally since the April 8 lows — especially if trade deals and tariff reductions don’t materialize soon — the lesson is clear: in our view, staying the course during downturns is almost always the best strategy.

Several factors are at play in the market’s recent recovery:

1.Optimism about trade and tariffs. The White House has signaled progress on deals with several countries, including India, South Korea, Japan, and the U.K. The U.S. and China also announced constructive progress in their trade negotiations this week, leading to a 90-day pause on reciprocal tariffs.

2.Resilient economic fundamentals. The U.S. economy added 177,000 new jobs in April, keeping unemployment low at 4.2%.¹Consumer spending grew 1.8% in inflation-adjusted terms in the first quarter, while business investment surged over 20% annually — bright spots that were overshadowed by concerns about the (-)0.3% U.S. gross domestic product (GDP) contraction caused by surging pre-tariff imports -- the first negative reading since 2022.²

3.Easing inflation delayed but still coming. While tariffs may slow further improvement, we and the markets expect inflation to resume its downward trend toward the Federal Reserve’s (Fed) 2% target by 2026. Falling oil prices and declining long-term Treasury yields since January are also helping.

4.Strong corporate profits. S&P 500 firms are on track for over 13% first-quarter earnings growth, roughly double expectations when earnings season began. Leading technology companies have reaffirmed or increased capital spending plans despite trade uncertainty, committing to a more than 30% increase in 2025 over 2024, underpinned by confidence in the potential payoffs of artificial intelligence.

Looking ahead, stocks may need a bit of a breather after making up so much ground quickly. Stagflation and recession risks cannot be dismissed as growth slows and tariffs loom.

While the U.S. economy and corporate America foundations remain in good shape, we suggest maintaining a diversified exposure to equities and fixed income that is in line with your long-term targets during these precarious times.

As always, please feel welcome to reach out to your Advisor with questions.

1. https://www.bls.gov/news.release/pdf/empsit.pdf
2. Finance.Yahoo.com

This material is for general information only and is not intended to provide specific advice or recommendations for any indiv idual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or
accuracy.

This research material has been prepared by LPL Financial LLC.

• As our client, you are invited to attend the LPL Financial-sponsored webinar,Maximizing Social Security and Managing Health Care Costs, onWednesday, May 21, 2025, 6:00 pm ET / 3:00 pm PT.Please click hereor the image below for the invitation and to to RSVP to this event.

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Things You Can Do on the IRS Website

While the IRS website might not be in your top bookmarks, the website is helpful for a lot of things regarding taxes. Here are just a few things you can do on the site:

• Use Free File to access brand-name tax software and online fillable forms.
• Use the IRS e-file system: a safe, easy, and common way to file your tax return.
• Check the status of your tax refund.
• Find out how to make payments electronically to pay your federal taxes. You can use a credit or debit card or enroll in the US Treasury’s Electronic Federal Tax Payment System to pay your taxes.
• Get tax forms and publications, including helpful tips for frequently asked questions.

^{This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.} 

^{Tip adapted fromIRS.gov}

Use Privacy Settings and Avoid Sharing Personal Information on Social Media

Social media is a great way to stay connected, but it can also be a target for identity theft and scams if personal details are shared publicly. Be sure to adjust your privacy settings on platforms like Facebook, Instagram, or Twitter, so only trusted friends and family can see your posts. Avoid sharing sensitive information like your full birthdate, address, or details about your daily routine. Scammers can use this information to build a profile and potentially trick you into giving out more personal data. It's always better to keep your personal life private online to reduce the risk of falling victim to scams.

I protect you. I sit on a bridge. You can see through me. People walking by might wonder what I hide. What am I? 

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Last Month's Riddle:Out of the 100 years in the 20th century, there is only one that reads the same upside down as it does right side up. What year is it?
Answer:1961