NEW YORK (Reuters) -BlackRock's assets under management hit a new high in the second quarter as global markets rallied on the prospect of trade deals and interest-rate cuts from the U.S. Federal Reserve, brushing aside earlier tariff-related jitters.

A robust labor market and hopes that President Donald Trump would ease some of his harsher trade measures pushed major U.S. indices to all-time highs through the end of June. 

That marked a sharp reversal from early April, when tumult in U.S. trade and geopolitical policy battered confidence and fueled recession fears, concerns that BlackRock CEO Larry Fink echoed at the time. 

"We're entering our seasonally strongest back half of the year with considerable momentum and a robust pipeline," said Fink on a post-earnings call with investors.

The benchmark S&P 500 index rose 10.57% in the second quarter of 2025.

BlackRock's assets under management rose to $12.53 trillion in the quarter ended June 30, up from $10.65 trillion last year.

Long-term net inflows fell to $46 billion in the quarter, down 9.8% on a year ago and below average analyst expectations of $53.5 billion, with $52 billion pulled from a lower-fee index fund by a single institutional client. Overall net flows came in at $68 billion, driven mainly by cash-management and money-market funds.

Equity product inflow surged to $28.8 billion, compared to $6.44 billion a year ago, while fixed-income products saw outflows of $4.66 billion, BlackRock said. Trends for the business are being closely scrutinized, given the turbulence in U.S. Treasuries this quarter. The benchmark 10-year yield recorded one of its biggest weekly increases since 2001 after the "Liberation Day" shock. 

BlackRock's fixed-income executives expressed concerns last month that ballooning U.S. debt could suppress appetite for longer-dated Treasuries and the dollar, which recorded its worst first-half performance this year since 1973.

Safe-haven Treasuries and the greenback have also suffered as markets price in tax cuts and spending hikes from Trump's recently passed "Big Beautiful Bill," which nonpartisan analysts predict will add more than $3 trillion to the country's $36.2 trillion debt.

Overall retail inflows fell to about $2 billion from $5.7 billion a year earlier, weighed down mainly by equity outflows as retail investors reduced contributions due to market volatility.

On Tuesday, BlackRock management also highlighted the potential boost in growth that the firm anticipates from the rapidly-expanding stablecoin ecosystem. A bill - dubbed the Genius Act - is expected to pass the House of Representatives this week and head to U.S. President Donald Trump's desk, which could legitimize stablecoins.

"We see a great untapped opportunity for cash and liquidity where people want to use the technologies of digital assets to access traditional instruments like Treasuries," Fink said.

BlackRock, which has previously said it wants to become the largest cryptocurrency asset manager in the world by 2030, said its tokenized liquidity fund already manages $3 billion in assets.

Thanks to a weaker dollar, BlackRock recorded a positive foreign exchange impact of $171.52 billion in the quarter, compared with a $35.45 billion decline in the year-ago period.

Its performance fees fell 42.7% to $94 million in the reported period, after falling nearly 71% in the first quarter. 

Shares of the asset manager were down more than 6% in early trading on Tuesday, highlighting investor worries on outflows during the quarter. From the start of the year to Monday's close, the stock had risen about 8.4%, outperforming the S&P 500.

"Overall, results were decent given the volatile market backdrop," said Kyle Sanders, a financial services analyst for Edward Jones, in a note. "We expect investor attention will continue to shift more toward growth measures within BlackRock's private-market capabilities over the next few quarters."

PRIVATE MARKET BOOST 

BlackRock has been pivoting towards private markets, which provide higher margin revenue compared to those from low-cost ETFs, where it faces intense competition and fee compression as the market matures.  

Private markets saw inflows of $6.82 billion in the quarter. The New York-based firm said at its investor day last month that its private markets and technology businesses would make up 30% or more of its total revenue by 2030, up from 15% in 2024.

   As part of this push, BlackRock last month unveiled plans to include private assets in its retirement plans, which account for more than half of the money the company manages. 

Technology services revenue rose 26.3% to $499 million, reflecting the first full quarter of data provider Preqin, which BlackRock bought in a $3.2 billion deal last year. The deal closed on March 3, 2025.

Its total revenue - most of which is earned as a percentage of assets under management - rose to $5.42 billion from $4.81 billion a year ago, driven mainly by a 6% rise in organic base fee growth, as well as fees from its takeover of Global Infrastructure Partners last year and higher technology services and subscription revenues. 

BlackRock's total expenses rose to $3.69 billion from $3.01 billion last year.

Excluding the impact of some one-time charges, net profit jumped to $1.88 billion, or $12.05 per share, for the three months ended June 30, up from $1.55 billion, or $10.36 per share, a year earlier. Analysts on average were expecting a profit of $10.82 per share on revenue of $5.46 billion.