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Over the month of June 2025, U.S. large-cap equities had a solid rebound. According to the commentary from S&P Dow Jones Indices, the S&P 500 rose approximately 4.96 % in June. The Dow gained around 4.32 % for the month. Meanwhile, the Nasdaq Composite advanced by about 6.6 % in June (and following a roughly 9.6 % gain in May) according to one report.

On a year-to-date basis, the S&P 500 was up only modestly — about 5.5 % (as of end June) according to S&P Dow Jones’ commentary. That is a relatively muted return in the context of indices globally and historically — one of the elements provoking concern around the U.S. market’s relative positioning.

The chart of behavior: after a sharp draw-down earlier in spring (more on that below), the indices have clawed back toward new highs: for instance the S&P 500 and the Nasdaq both hit record highs around 27 June.

What’s driving the market action

On the positive side, two major tailwinds are evident:

1. AI / Tech mega-cap leadership

The resurgence of interest in artificial intelligence, semiconductors and related infrastructure has been a clear driver of the market’s recovery. For example, the semiconductor & equipment industry group within the S&P 500 is reported to have climbed 14.8 % in June alone.

Companies such as Nvidia Corp. (NVDA) and the other so-called “Magnificent Seven” (Apple, Microsoft, Amazon, Meta, Alphabet, Tesla) have regained traction. As one LSEG note pointed out, by end-June Nvidia had become the largest U.S. listed company (by market cap) — surpassing Apple and Microsoft.

On 3 June, an Investopedia report flagged that “Major indexes closed higher… boosted by big gains for chip stocks.”

In short: the tech/AI mega-caps are carrying much of the weight in this advance.

2. Optimism on monetary policy & trade-shock recovery

Investor sentiment improved via a combination of factors: signs of easing trade-friction (or at least hope thereof), expectations that the Federal Reserve might begin cutting rates, and fewer global geopolitical shocks (temporarily). Reuters noted on 27 June that the S&P and Nasdaq hit record highs “buoyed by renewed AI bets and potential interest-rate cuts”.

The earlier major trade/tariff shock from earlier in the year appears to have been absorbed, and markets have responded accordingly.

Where the under-performance and divergence lie

Despite the headline gains, several warnings and divergences are visible:

• The narrowness of the rally: While tech/AI and mega-caps are powering ahead, much of the broader market (especially non-tech, non-mega-caps) remains less enthusiastic. Madison Investments’ July 2025 market update observed that the S&P’s 5.1 % gain in June brought the YTD gain to only ~6.2 %, and noted that “the market rise in June and the second quarter … was narrow, tech-driven, and lacked broad enthusiasm.”

• Relative global under-performance: Although the U.S. market remains the largest issuer venue, the S&P 500 (in prior commentary) ranked only 41st among 60+ global indexes in annual return through a recent period. (As the earlier story pointed out.) That signals that while the U.S. market is massive, returns have not been outstanding compared to many international markets.

• Trade/tariff headwinds still exist: The narrative highlights how earlier in the year, when the administration signaled sweeping tariffs, the S&P suffered major draw-downs (this correction is documented).

• Manufacturing/industrial strength remains mixed: While manufacturing in the U.S. is expected to benefit from investment, the broader industrial/manufacturing sector has not yet matched the momentum of tech.

For example, Deloitte’s manufacturing industry outlook points to continued investment yet also warns of softening demand and labor/skills constraints. The manufacturing sector PMI remains relatively modest (around 50-53) rather than surging.

Behavior of key stocks / sectors

Tech/AI stocks:

Nvidia is singled out repeatedly: In late June, reports noted that Nvidia’s market cap rose to ~$3.76 trillion, and that the semiconductor group was strongly outperforming.

Other chip players such as Advanced Micro Devices (AMD) are also benefiting from AI hardware roll-outs, memory-chip pricing improvement (DRAM/HBM), etc.

These gains, however, are concentrated — many of the other 490+ companies in the S&P are growing at slower earnings expectations (one earlier narrative said: tech/AI ~15 % growth vs rest ~6–7 %).

Large multinationals / blue-chips:

These remain mixed. Some large caps tied to trade or manufacturing/industrial exposure are recovering, but these sectors still face tariff/backlash risk.

For example, a market live feed noted that UK car exports to the U.S. halved in May due to tariffs, and that companies like Nike, Inc. warned of ~$1 bn cost headwinds from China tariffs.

Among Dow components, a news note flagged that in June 2025, the best performers included Goldman Sachs (+18 %), Nike (+17 %), Nvidia (+17 %) — while weaker performers included McDonald’s, Procter & Gamble (-7 %/-6 %) respectively.

This shows that even among large caps, there is divergence depending on exposure (tech/AI vs consumer/industrial).

Manufacturing/industrial stocks:

These have some tailwinds (reshoring, higher cap-ex) but also headwinds (tariffs, input cost inflation, labor shortages). For example, Barron’s flagged names like Eaton Corporation, GE Vernova, Caterpillar Inc. as potential beneficiaries of a manufacturing renaissance — yet risk remains.

The manufacturing resume is still somewhat constrained: the PMI reading remains modest, and commentary suggests investment is rising but demand softening. That means manufacturing stocks have not led the market recovery in the way tech has.

Trade/tariff shock and recovery path

Earlier in 2025, the market experienced a sharp shock tied to tariff escalation under the Trump administration. The literature points to a “correction” for the S&P: one estimate had the S&P falling ~18.9 % from February 19 through April 8.

This drew a clear negative linkage: tariff risk = economic disruption = earnings uncertainty = market drop. As the earlier story pointed out, concern around trade policy, currency (weak dollar), and U.S. debt all weighed on investor sentiment.

Since that trough, the rebound has been led by tech/AI and the accrued hope of monetary easing. The index reaching a fresh high on 27 June (S&P ~6,178.80) shows the recovery has largely been mechanical and concentrated.

But the point remains: while the S&P regained its prior high, the broader context (global returns, breadth of performance) still raises questions.

Summary: Where do things stand today?

• The S&P 500 is back into record-high territory, aided by tech/AI momentum, and the Nasdaq likewise.

• However: the breadth of the rally is weak — few sectors outside tech/mega-caps are driving the move.

• Manufacturing and industrial groups are improving but have yet to shine relative to tech.

• Trade/tariff risks remain lurking: cost headwinds for exporters/importers, manufacturing supply-chain disruption, and policy uncertainty remain a drag on many non-tech segments.

• The year-to-date return for the S&P 500 remains modest (~5.5 %) despite the June push, leaving the U.S. market somewhat behind many global peers in relative terms.

• The narrow leadership (mega-cap tech) means the market may be vulnerable if that leadership falters — valuations are elevated, and the risk of a rotation or shock (tariff, inflation, Fed policy) remains.

Implications & outlook

From an analytical-investor-lens:

• Concentration risk: If only a handful of tech stocks are powering the market, rotation risk is real. If manufacturing or trade-sensitive sectors do not pick up, the overall market could stall.

• Valuation dynamics: The tech/AI segment is richly valued; if investor expectations disappoint (earnings, regulation, supply-chain trouble), we could see mean reversion.

• Policy/trade shock reminder: The tariff risk that triggered the drawdown earlier this year remains a latent threat. A renewed escalation would impact industrials, exporters, larger multinational manufacturing stocks.

• Manufacturing as a sleeper: While manufacturing stocks are not leading now, the structural investment theme (reshoring, cap-ex, automation) may play out over the medium term. Investors with a broader sector outlook may position accordingly.

• Global comparative return: U.S. investors need to be aware that while U.S. remains the largest equity market, the relative return benefit is no longer a given. International equities may offer stronger performance in some cases.

In short: the U.S. equity market looks healthy in that indices are back to highs and investor sentiment is improved. But it also looks partial in that the move is narrow, driven by a few mega-caps, and potentially vulnerable to trade, policy or rotation shocks.

The S&P’s under-performance in a global context is a warning sign rather than a comfort. If I were to give one line: the market is back, but the market that is back is mostly tech-driven; the rest of the market still has catching up to do.

Disclaimer: The opinions and views expressed in this article/column are those of the author(s) and do not necessarily reflect the views or positions of South Asian Herald.