The Confident Chronicles: June 2, 2025
The U.S. stock market enters June 2025 with a cautiously optimistic outlook, following a volatile spring marked by significant policy shifts and market reactions.
📈 May Recap: A Remarkable Rebound
May witnessed a robust recovery, with the S&P 500 climbing over 6%, marking its best May performance in 35 years. The Nasdaq surged nearly 10%, driven by strong tech earnings and easing tariff concerns after President Trump retracted some trade measures and a federal court deemed many tariffs illegal. Approximately 78% of companies surpassed earnings expectations, and inflation indicators showed signs of cooling, bolstering investor confidence. (Barron's)
🔮 June Outlook: Cautious Optimism Amid Uncertainties
Historically, June has been a middling month for U.S. equities, with the S&P 500 averaging a 0.0% return over the past 35 years. However, the Nasdaq 100 has shown a modest average gain of 0.6% in June, suggesting potential for continued tech sector strength. (StoneX)
Despite the May rally, several factors could influence market performance in June:
Trade Policy Developments: Uncertainty remains regarding President Trump's proposed tariffs set for July 9, which could impact investor sentiment. (Investopedia)
Economic Indicators: Upcoming U.S. employment data and global PMI surveys will provide insights into economic health and potential central bank actions. (S&P Global)
Market Valuations: Some strategists warn of overvaluation, with the S&P 500 trading at 23 times earnings, raising concerns about a possible 20% correction if macroeconomic conditions deteriorate. (Business Insider)
🧠 Sector Insights and Investment Considerations
Technology: The tech sector continues to lead, with companies like Nvidia and Tesla showing strong performance. However, analysts advise selective investing, focusing on firms with solid fundamentals amid AI-driven enthusiasm. (Business Insider)
Financials and Utilities: These sectors are expected to benefit from stabilizing interest rates and are recommended for investors seeking relative stability. (Business Insider)
Low-Volatility Stocks: Companies like Berkshire Hathaway and Coca-Cola have outperformed, appealing to investors favoring stability during market turbulence. (Barron's)
🧭 Strategic Takeaway
While the market has shown resilience, investors should remain vigilant, monitoring policy developments and economic indicators. Diversification across sectors and asset classes, with a focus on quality and stability, may be prudent strategies as the market navigates potential headwinds in June.
Stay confident my friends and enjoy this month’s Confident Chronicles!
-Kevin T Clark, RF™ - CEO & ERISA Nerd
PLAN CONFIDENCE MODEL UPDATES:
FUTURE CONTRIBUTIONS:
Future contributions are monies that are added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that we hope to be “on sale” for the next 30 days.
If we are correct, this will allow you to buy more shares in your portfolio.
This month we are advising that you use the following:
· (Bonds) High Yield Bond
· (Stocks) Large Growth
· (Stocks) Technology
“Future Contributions” are an optional feature in Plan Confidence, and you may or may not receive this advice.
Please discuss this with your advisor if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - STRATEGIC MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is commonly known as a “rebalance”.
Our “Strategic Models” combine the benefits of asset allocation and “buy and hold” strategies.
These models rebalance quarterly back to their risk “targets” and remain fully invested through all market cycles.
Our Strategic Models rebalance the first trading day of every quarter.
Strategic Models – No Changes
(last updated on April 1st )
Please talk to your adviser if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
CURRENT ALLOCATIONS - TACTICAL MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is known as a “rebalance”.
Some plans have trading restrictions on how often you can rebalance the money in your plan. Be sure to know your plan’s restrictions before implementing any tactical strategies.
Our “Tactical Models” combine the benefits of asset allocation and “momentum investing” strategies.
These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash than the Strategic Models.
Our Tactical Models may rebalance on any given day.
Please be sure to look for an email from support@planconfidence.com letting you know when to make changes.
Tactical Models UPDATED TODAY
(Below are the changes from the last allocations on May 12th)
(You can right click on the picture above and save it to your computer to see it better)
The technical indicators we follow have gone “negative” at the end of May. This means that we will be reducing equity exposure to each model by 50%. This will lock in the gains from May as well as give us “dry powder” to redeploy if the market experiences downward momentum.
The equity exposure reduction is a purely technical move.
However, you will also see some reductions in many asset categories as well.
For stocks you will see a reduction in commodities, emerging markets, foreign stocks and large blend. The monies have been shifted into large growth, large value and technology.
For bonds you will see a reduction in intermediate core plus and multisector bond categories. Those monies have been shifted into intermediate core, global bond (usd hedged), long government and short term inflation protected categories.
Below is the Trade Rationale written by BlackRock:
“The market’s swift recovery from the April lows underscores the importance of patience and discipline in the face of volatility. We initially viewed the extremeness of the ‘Liberation Day’ selloff as likely short-term in nature, exacerbated by forced selling and headline anxiety, rather than a reflection of deteriorating fundamentals or a permanent impairment of the U.S.’s position in the global economy. The decision to hold steady during such a turbulent period was bolstered by our proactive risk reductions in February and post-election trades into scarce assets like gold, which helped soften the impact of recent market swings. But the snapback rally in stocks has now provided a much more convenient window to tactically reduce risk, as the shadow of trade policy and geopolitical uncertainty still loom large.
Looking ahead, we believe the interplay of tariffs, inflation, and growth will continue to be the dominant macro themes shaping the investment landscape. While recent tariff announcements may introduce short-term inflationary pressures, we view these effects to be transitory and unlikely to reverse the broader trend of structural disinflation. In our view, the greater risk from tariffs is their potential drag on global growth, as supply chains potentially struggle to adjust, and business confidence fluctuates. As such, we believe the Fed will be inclined to look through these potential temporary price increases and follow through on at least a few rate cuts over the second half of the year as the state of growth and labor markets begin to take precedence over inflation. This is also why we still see diversification merit in longer-term rates as markets underprice disinflation, growth risks, and recession fears.
Regionally, our equity positioning reflects a more balanced approach. This shift is not a reflection of diminished confidence in U.S. exceptionalism, but rather a pragmatic response to the unpredictable nature of ongoing trade negotiations and policy headlines. The recent strength in U.S. equities gave us the opportunity to move closer to benchmark weights, acknowledging both the headwinds posed by evolving trade dynamics and the benefits of diversification at this stage in the cycle. Within EM, we moderated our underweight to China, recognizing the heightened sensitivity of Chinese equities to seesawing trade policy announcements. While our long-term outlook on China remains cautious due to a variety of structural challenges, we believe maintaining a sizable underweight in the current environment could introduce unnecessary volatility. This adjustment aligns with our broader risk management framework, which prioritizes avoiding uncompensated geopolitical risks.
Overall, our outlook is one of cautious optimism. We look to take profits on outsized winners (like gold) and tighten active risk across regions and within our fixed income allocation while still preserving upside participation. By focusing on quality, diversification, and certain high-conviction opportunities, we aim to navigate what we see as a market environment where headlines drive swings, but fundamentals remain resilient.”
This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial professional know enough about their circumstances to make an investment decision.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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