The Markets
Major U.S. stock indexes raced to new highs last week.
In a remarkable recovery from April’s double-digit downturn, the Standard & Poor’s (S&P) 500 Index raced to a new record high last week, and so did the Nasdaq Composite Index (Nasdaq). Key drivers behind the ascent included:
Investor optimism. Last week, the “Bull and Bear” investor sentiment indicator rose to its highest level since last November, reported Martin Baccardax of Barron’s. Easing of tensions in the Middle East lifted investor optimism. As the region settled, oil prices moved lower, quelling concerns that rising oil prices would push inflation higher.
Consumer sentiment. The University of Michigan’s Consumer Sentiment Index improved 16 percent in June, although it remained 18 percent below December’s reading. Expectations for personal finances and business conditions improved. However, “consumer views are still broadly consistent with an economic slowdown and an increase in inflation to come,” reported Surveys of Consumers Director Joanne Hsu.
Muted inflation. It was widely expected that higher tariffs would mean higher inflation. So far, that hasn’t been the case. In May, U.S. government revenue from tariffs surged to a record high, reported Jarrell Dillard of Bloomberg, and consumer prices remained relatively steady. The Personal Consumption Expenditures (PCE) Index showed core inflation, which excludes volatile food and energy prices, rose 2.7 percent year over year. That was slightly above expectations, reported Nicole Goodkind of Barron’s.
Trade optimism. While concerns remain about the impact of tariffs on inflation, investors gained confidence that the outlook for trade is improving. “Trump administration officials have recently softened the focus on the self-imposed July 9 deadline for deals. On Friday, Treasury Secretary Scott Bessent [said] he hoped to have trade wrapped up by Labor Day and described the latest pact with China as de-escalatory,” reported Reshma Kapadia and Elsa Ohlen of Barron’s.
While current market momentum is impressive, “Some market watchers are cautioning that valuations are looking lofty, and that the S&P 500 would need an earnings boom or drastic Federal Reserve interest-rate cuts to justify current levels,” reported Natalia Kniazhevich of Bloomberg.
U.S. stocks faltered on Friday after an announcement that trade negotiations with Canada would not take place, reported Karishma Vanjani of Barron’s. However, the S&P 500 and Nasdaq still finished the week at record highs. Yields on longer maturities of U.S. Treasuries moved lower over the week.
| Data as of 6/27/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 3.5% | 5.5% | 14.0% | 18.3% | 17.2% | 13.3% |
| Vanguard Total Intl Index (Foreign Stocks) | 3.5 | 17.9 | 17.9 | 13.0 | 10.4 | 5.9 |
| Total Bond Market (U.S. Dollar Bonds) | 0.6 | 3.6 | 5.2 | 2.8 | -0.8 | 1.8 |
| Gold (per ounce) | -2.9 | 25.3 | 40.8 | 21.5 | 13.1 | 10.8 |
| Bloomberg Commodity Index | -3.6 | 4.2 | 1.5 | -5.5 | 9.9 | 0.2 |
S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested in directly.
HOW AFFORDABLE ARE HOMES IN THE UNITED STATES? In the United States, homes are less affordable than they’ve been in a while. The Atlanta Federal Reserve’s Home Ownership Affordability Monitor tracks whether households earning a median income can afford a median-priced home. The Fed calculates that a home is affordable when the annual cost of owning it is less than 30 percent of a household’s annual income.
In April 2025 (the most recent data available), a median-priced home was out of reach for a median-income household.
By the Fed’s calculations, a median-income household would need to spend 46 percent of its annual pay to own a median-priced home. To afford the home, the household would need annual income of about $123,000, an increase of about 55 percent. Here are the Fed numbers from April:
| Median income (Median means one half of households earn more, and one half earn less):
|
$79,409 |
| Median home price (One half of homes are priced higher, and one half are priced lower):
|
$392,500
|
| Rate on a 30-year fixed-rate mortgage:
|
6.7 percent
|
| Median monthly payment (includes principal, interest, taxes, homeowners’ insurance, and private mortgage insurance): | $3,069 |
|
Percent of pay needed to meet annual cost of homeownership: |
46 percent |
Homeowners’ insurance is becoming more expensive
In some regions of the U.S., homeowners’ insurance is becoming more costly – and harder to acquire. “Homeowners in communities affected by substantial weather events are paying far more than those elsewhere. From 2018 to 2022, consumers living in the 20 percent of zip codes with the highest expected annual losses to buildings from climate-related perils paid…82 percent more than those in the 20 percent lowest climate-risk zip codes,” reported the U.S. Department of the Treasury.
How are younger people buying homes?
Younger Americans are employing a variety of strategies to make a home purchase possible. According to a survey by a leading home sale site, aspiring Gen Z and Millennial homebuyers are:
- Working two jobs (39%),
- Receiving cash gifts from family (36%),
- Taking money from retirement plans early (22%),
- Spending an inheritance (16%), or
- Living with parents/family members to save money (13%).
If you’re interested in helping a loved one with a home purchase, please get in touch. We can help discuss the options.
WEEKLY FOCUS – THINK ABOUT IT
“Listen to the mustn’ts, child. Listen to the don’ts. Listen to the shouldn’ts, the impossibles, the won’ts. Listen to the never haves, then listen close to me…Anything can happen, child. Anything can be.”
― Shel Silverstein, Author
Best regards,
Waterford Advisors
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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
https://www.barrons.com/articles/stocks-rally-earnings-jobs-manufacturing-c98862f5 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Barrons-Stocks-Have-Powered-Past%20-%201.pdf
https://www.bloomberg.com/news/articles/2025-06-11/us-tariff-revenue-hits-fresh-record-helping-shrink-may-deficit or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Bloomerg-Us-Tariff-Revenue-Hits-Fresh%20-%203.pdf
https://www.bea.gov/sites/default/files/2025-06/pi0525.pdf [Table 7]
https://www.barrons.com/articles/inflation-pce-fed-rates-95c66d65 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Barrons-Inflation-Spending-Data-Leave%20-%205.pdf
https://www.barrons.com/articles/us-china-trade-deal-trump-lutnick-tariffs-0cab501a or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Barrons-Trump-Ends-Talks-with-Canada%20-%206.pdf
https://www.bloomberg.com/news/articles/2025-06-27/s-p-500-rally-faces-key-test-as-profit-engine-is-seen-sputtering or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Bloomberg-S&P-500-Rally-Faces-Key-Test%20-%207.pdf
https://www.barrons.com/livecoverage/stock-market-news-today-062725?mod=hp_LEDE_C_1
https://www.atlantafed.org/research/data-and-tools/home-ownership-affordability-monitor [Affordability chart and Affordability Gap chart tabs] or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/06-30-25-Federal-Reserve-Bank-Atlanta-Home-Affordabilty%20-%2010.pdf
https://home.treasury.gov/news/press-releases/jy2791
https://www.redfin.com/news/gen-z-millennial-down-payment-family-help/