The S&P IMI Risk Appetite Index improved from -19% in May to -13% in June, meaning that investor risk appetite remains heavily risk averse but to the smallest degree since January.

• The S&P 500 is expected to rise only 2% YoY by year-end, following gains of 24% and 23% in 2023 and 2024.

• Political environment, valuations, and fiscal concerns (esp. deficit) remain the top drags on equity sentiment.
• 54% of investors expect the Fed to cut rates by up to 50 bps in H2 2025, but only 2% foresee a rate hike.
• Sector outlooks favor tech, communication services, and defensive names (utilities, staples, financials), while real estate, consumer discretionary, energy, and now healthcare are out of favor.
• The dollar outlook is at its most bearish since late 2022, reflecting increased recession concerns and political instability.