Midyear Outlook 2025: Pragmatic Optimism, Measured Expectations

LPL Research recaps markets and the economy to date plus shares investor-focused insights for the remainder of the year. Tap into our team’s perspectives to help fuel your financial goals.

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Making Sense of Multiple Shifts

At LPL Research, we know that markets are evermoving, can change quickly, and be complex to understand. But the back-and-forth of the last six months takes it all to a whole new level. That’s why we offer action steps for investors to consider based on our expectations for the remainder of the year.

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Economy

Focus on your long-term strategy. We expect a slight uptick in inflation and a softening job market. So, staying true to your overarching goals may serve you well.

 

Enhance stability. Diversifying across asset classes and regions and adding alternative investments can help shore up portfolios. 

Stocks

Keep portfolio risk level near benchmarks. This will help protect it during bouts of volatility and be in position to take advantage of potential positive market catalysts (e.g., tax bill, investment into artificial intelligence).

 

Leverage market pullbacks. These could be opportunities to selectively increase stock exposure.

 

Find opportunity in sector and company size. We recommend financials and communication services and U.S. large caps with strong growth prospects.

Bonds

Consider income generation. Tap into historically high yields with bonds up to five-year terms.

 

Rethink cash holdings. Consider replacing them with bonds, as rates will decrease when the Federal Reserve eventually cuts rates later this year. 

Find Your Angle of Opportunity

No one knows specifically what the remainder of the year will bring, though we do believe uncertainty will begin to wane and be replaced with some clarity. That’s where these perspectives can help. They set you and your advisor up to navigate the twists that will inevitably arise — in a way that’s true to your financial goals, dreams, and aspirations. To get in-depth commentary and sophisticated analysis, read the full Midyear Outlook report or download the Investor Report for more highlights.

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Disclosure

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. 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.

All index data from FactSet.

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.

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