Three Wild Months on Wall Street: Stocks Hit Record Highs, Dollar Drops to Historic Lows

Wall Street wrapped up a remarkable second quarter on a high note, with US stocks surging to fresh record levels and volatility subsiding — all while the US dollar suffered one of its worst performances in decades.

As of Monday afternoon, the Dow Jones Industrial Average rose by 150 points (0.35%), while the S&P 500 and the tech-heavy Nasdaq Composite each gained 0.2%. Both the S&P 500 and Nasdaq hit record highs on Friday and continued that momentum to start the week.

The turnaround has been striking. Just three months ago, markets were reeling from the impact of President Donald Trump’s tariff announcements. Stocks had tumbled in March and April, triggering fears of a recession. But a strong rebound in May and June brought optimism back, even as questions remain about how long the rally can last.

Stock Markets Soar

The S&P 500 rose 10% in Q2, following a 4.59% drop in Q1, and is now up 24% since its April 8 low. Key sectors that suffered the most from initial tariff fears — particularly technology — led the comeback. The Nasdaq, driven by AI enthusiasm and heavyweight stocks like Nvidia and Microsoft, has soared nearly 33% since early April, making this its best quarter since June 2020.

Clark Bellin, CIO of Bellwether Wealth, noted, “Tech has taken the lead again, and with renewed AI momentum, it’s likely to drive gains through the rest of 2025.”

Dollar Tumbles to Multi-Decade Low

While equities have surged, the US dollar has been in a free fall. The US Dollar Index is down 6.6% for the quarter and has lost 10% year-to-date — the worst first-half performance since 1973. The euro has gained nearly 13% and the British pound 9% against the dollar, eroding the greenback’s traditional haven status.

ING strategist Francesco Pesole warned that the dollar’s sharp decline could signal eroding confidence in US financial leadership and policy stability.

Volatility Fades — For Now

Wall Street’s fear gauge, the VIX, spiked in April amid tariff uncertainty but fell 26% in Q2, settling around 17 points. That’s a far cry from its April highs above 50 — levels typically seen during major crises like the COVID-19 pandemic or the 2008 recession.

Bond Market Finds Stability

After months of turmoil, confidence in US Treasuries appears to be returning. Foreign investors participated actively in recent bond auctions, easing fears of a sell-off in American debt. The 10-year yield hovered around 4.25% on Monday, while the 30-year yield remained near 4.81%.

Oil Prices See Turbulence Amid Geopolitical Tensions

Crude oil spiked mid-June due to rising tensions between Iran and Israel. Brent and WTI futures posted their biggest one-day gains since 2022. However, as tensions cooled, prices fell back to pre-crisis levels. WTI was down 0.1% at $65.40 per barrel, and Brent held steady near $66.83.

Where Do We Go from Here?

Retail investors have been major drivers of the rally, pouring over $3.2 billion into stocks in late June alone. But institutional and global investors remain cautious, holding large amounts of cash and waiting for clearer signals.

“The big question for the second half of 2025,” says Bellin, “is where to deploy new capital. Markets are expensive, but dips may offer opportunities.”

Mohit Kumar of Jefferies echoed this view, stating that while he doesn't foresee a dramatic rally ahead, the slow upward grind of risky assets is likely to continue.

Despite S&P 500 and Nasdaq setting records, the Dow remains about 1,000 points, or 2.28%, from its peak.