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US Stock Market Direction in H2 2025: Will Reciprocal Tariffs and Trade War Trump Data?

Strategic Insights

— 2 min read

The US stock market is waiting for fresh triggers and direction, with investors closely monitoring the implementation of reciprocal tariffs and the emergence of a trade war. The US market's leading indices closed flat in Wednesday's session after the Federal Reserve kept interest rates unchanged, amidst escalating tensions in the Middle East. The ongoing Israel-Iran conflict has stoked fears of deeper US involvement, affecting investor sentiment. The Federal Reserve's cautious tone, pointed to unclear inflation impacts from President Trump's tariffs and the risk of stagflation.

Key Takeaways:

  • The US stock market's direction in H2 2025 will be influenced by the implementation of reciprocal tariffs and the emergence of a trade war.
  • The US Fed's two-day FOMC meeting concluded with rates unchanged, with Federal Reserve Chair Jerome Powell reaffirming a data-dependent approach.
  • Powell pointed to unclear inflation impacts from President Trump's tariffs and the risk of stagflation, highlighting uncertainties in the market.
  • The US market's leading indices, S&P 500 and Dow Jones, are almost flat YTD in the first half of 2025.
  • The Trump administration's economic policies, notably the imposition of tariffs, have dominated the US markets since January 2025.
  • The suspension of reciprocal duties has led to a recovery in indices, but the trade war scenario will determine the market direction in H2 2025.
  • Juneteenth National Independence Day, celebrated on June 19, 2025, will be a federal holiday, with major U.S. exchanges closed for the day.
  • The holiday was established in 2021 under former President Joe Biden, and is recognized as a permanent state holiday in at least 30 states and the District of Columbia.

Statistics:

  • 30 states and the District of Columbia recognize Juneteenth National Independence Day as a permanent state holiday.
  • 10 major U.S. exchanges have added Juneteenth to their list of full-day market closures.
  • The US market's leading indices, S&P 500 and Dow Jones, are almost flat YTD in the first half of 2025, with a -0.1% and -0.2% change respectively.
  • The Federal Reserve's FOMC meeting concluded with rates unchanged, with 2 rate cuts projected in 2025 alongside downgraded growth expectations and higher inflation forecasts.
  • Reciprocal tariffs have dominated the US market's narrative since January 2025, with the suspension of duties leading to a partial recovery in indices.

Sources:

  • US Fed's statement on interest rates: "The Federal Open Market Committee decided to leave the target range for the federal funds rate unchanged at 1.50-1.75%." (Source: Federal Reserve)
  • President Joe Biden's statement on Juneteenth National Independence Day: "Today, we mark the 156th anniversary of Juneteenth, a day that commemorates the end of slavery in the United States." (Source: White House)
  • Securities Industry and Financial Markets Association's (SIFMA) holiday schedule: "The bond market in the US will be closed on Juneteenth, June 19, 2025." (Source: SIFMA)

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