Financial Market Update – Week of 10/6/25

Last week brought plenty of drama. Stocks hit record highs on unabated AI enthusiasm, the Fed hinted at more rate cuts, inflation showed signs of cooling, and a government shutdown delayed key data releases and clouded policy outlooks.

For investors, that mix means opportunity wrapped in uncertainty. Strong momentum, shifting Fed signals, tariff pressures, and a Washington-induced data blackout create a fast-changing backdrop.

Stock Index Performance 

Markets largely shrugged off the government shutdown, viewing it as a short-term political disruption rather than a major economic threat. Historically, shutdowns have had minimal long-term impact on stock performance. 

• The S&P 500 rose 1.09%.
• The Nasdaq 100 gained 1.15%.
• The Dow Jones Industrial Average increased 1.10%.

U.S. Government Shutdown

• The federal shutdown that began on October 1 is already muddying the economic waters. With the jobs report and other key releases on hold, investors are left partially flying blind just as the Fed weighs its next moves. The lack of hard data not only complicates policy decisions but also injects fresh uncertainty into markets.

• In the near term, economists estimate the hit at about 0.1 percentage point of annualized gross domestic product (GDP) per week — mostly from frozen government spending and reduced productivity. On paper, that’s a modest drag, but the cumulative toll grows quickly if the standoff drags on.

• Usually, shutdowns leave only a shallow mark on equities, with bonds steady so long as the debt ceiling isn’t in play. But with the Fed already battling inflation and consumer sentiment fragile, this time around could carry more bite than the usual Washington sideshow.

Mood vs. Money

• Consumer sentiment continued its downward slide, with the University of Michigan index falling to 55.1 in September — its lowest reading since May — reflecting ongoing concerns about inflation and the broader economic outlook.

• September’s dip in sentiment was modest but broad, spanning age, income, and education groups, and all five survey components. The one exception: sentiment held steady among households with larger stock portfolios, while those with smaller or no stock holdings saw confidence fall further.

• Still, not all indicators point to retrenchment. As we saw, retail sales rose 0.6% in August, and personal consumption expenditures are up roughly 3% year-over-year. That suggests many households are continuing to spend, though a prolonged drop in confidence could eventually weigh on demand.

The Week Ahead 

• A drawn-out government shutdown could unsettle markets and delay the release of key economic data. Updates on budget negotiations or standoffs may prove highly market-moving, while market focus may shift to private-sector indicators and corporate earnings until normal government reporting resumes.

• Third-quarter reports will put recent AI-driven enthusiasm and blue-chip resilience to the test. Strong results and confident outlooks could extend the rally, while disappointments from bellwether names risk triggering swift portfolio adjustments.

September reminded us that markets can test even the most disciplined investors. Maintaining a steady approach continues to pay off, even as data (or the lack of it) and Fed commentary drive short-term swings. Don’t hesitate to reach out with any questions or concerns.

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It’s been an active month for the markets, with stock indexes hitting new highs and the U.S. economy indicating notable resilience. Recent government data shows robust gross domestic product (GDP) growth and steady consumer strength, even as headlines showed continued questions about inflation trends and Federal Reserve policy. 

In September, the Fed delivered a widely anticipated interest rate cut, aiming to support growth while keeping an eye on price pressures. Wall Street is paying close attention — and so are we.

Today, we’re breaking down the latest economic data, Fed actions, and what they could mean for your portfolio this fall. Our goal remains the same: to keep you informed and well-positioned as we navigate the months ahead.

Major U.S. Stock Indices 

September saw U.S. stocks surge, with the S&P 500 reaching new all-time highs near 6,700. Small-cap and value stocks led the rebound, supported by lower rates and domestic growth, while technology, communications, and consumer discretionary drove sector gains. 

Here’s the tally for the month:

• The S&P 500 gained 3.53%. 
• The Nasdaq 100 jumped 5.40%.
• The Dow Jones Industrial Average rose 1.87%.

Growth & Consumer Spending

• U.S. GDP climbed to a 3.8% annual rate in Q2, marking the strongest expansion in nearly two years after being revised sharply higher. This momentum was fueled mostly by resilient consumers whose spending rose 0.6% in August, outpacing expectations and driving gains across retail, travel, and durable goods — even amid higher tariffs and inflation in the mix. 
• Business investment is mixed. Housing-related spending fell 5.1% as residential fixed investment cooled, underscoring continued weakness in the sector. Meanwhile, corporate demand for equipment and services held steady, signaling a focus on productivity gains, even as broader capital expenditures stayed muted. 

• Trade provided an added lift in Q2, as a sharp drop in imports narrowed the deficit and amplified the strength of domestic growth. The move reflected earlier inventory adjustments and lingering tariff effects, offering a buffer for the U.S. economy at a time of global uncertainty. 
• Consumer spending may remain the linchpin for growth as housing and government outlays show signs of fading. For now, resilient households are keeping the recovery on track, but investors should watch for pressures that may challenge this momentum into year-end. 

Fed Policy Easing

• The Fed cut rates by 25 basis points in September, lowering the federal funds target to 4.00-4.25%. Policymakers debated a larger 50-basis-point cut, reflecting uncertainties about persistent inflation versus rising slack in the labor market. 
• The Fed’s September economic projections raised growth estimates and signaled expectations for further cuts into late 2025 and early 2026, but policymakers stressed a “data-dependent” approach. The Federal Open Market Committee (FOMC) dot plot showed consensus for at least one more cut before year-end. 

• Mortgage rates, just above 6%, are expected to edge lower through year-end, making home purchases and refinances more affordable and supporting stronger demand from both households and businesses as borrowing costs decline. 
• Lower Fed rates are also expected to ease financing costs for businesses, particularly for operating loans and commercial real estate, freeing up capital for expansion and hiring. This more favorable credit environment is a timely boost for small firms and corporations planning major moves for 2026. 

Labor Market & Inflation

• U.S. job growth slowed sharply in August, with only 22,000 jobs added, while unemployment held at 4.3%, a four-year high. Hiring remains concentrated in healthcare, and demand for senior roles continues to outpace that for junior positions. 

• Inflation remains elevated at 2.9% year-over-year, with core prices up 3.1%. Wage gains of 3.7% are just keeping pace with rising costs, leaving many consumers feeling squeezed. In fact, through the second quarter of this year, the top 20% of earners accounted for roughly half of all spending. 
• Federal Reserve Chair Jerome Powell is walking a tightrope: the slowing labor market reduces pressure for aggressive inflation-fighting, but persistent price increases are still weighing on household budgets and economic sentiment. Any significant shift in jobs or inflation data could spark further changes to monetary policy — or rattle investors in the months ahead. 

Navigating the Markets 

September ended with the U.S. economy demonstrating steady momentum despite ongoing inflation and interest rate headlines. Stock markets reached new highs, supported by strong consumer spending, optimism around Fed rate cuts, and sector rotation into technology and value stocks. A government shutdown loomed, however, on the eve of October, rattling stock markets on the first morning of the month.

While markets evolve rapidly, you don’t have to navigate them on your own. We’re here to provide perspective, answer questions, and help you make informed decisions based on your financial priorities.

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Last week delivered a mix of steady progress and fresh challenges for the U.S. economy. The Federal Reserve’s dovish policy move signaled a shift toward supporting growth as signs of cooling emerge in both employment and consumer spending. 

Though inflation remains a key concern, the road ahead will largely depend on upcoming economic data. Here are a few important developments to note:  

Stock Index Performance

• The S&P 500 gained 1.22%. 
• The Nasdaq 100 jumped 2.22%. 
• The Dow Jones Industrial Average rose 1.05%. 

Federal Reserve Lowers Rate 

• The Fed lowered the interest rate it charges banks by 25 basis points to the 4.00%-4.25% range, in what Federal Reserve Chair Jerome Powell characterized as a “risk management” decision amid shifting economic conditions. 
• Fed policymakers are weighing conflicting signals. The latest inflation reading climbed to 2.9% year-over-year — the highest since January — even as the labor market shows clear signs of weakening, complicating future rate decisions.
• Officials are currently split on future rate cuts. Fed projections show most members anticipate two additional reductions by year-end, while a minority expect just one or none, depending on inflation and jobs data. 

Consumer Spending 

• U.S. retail sales rose 0.6% in August, the third straight monthly gain and well above the 0.2% forecast, with strength across categories. The control group, a key input for GDP, climbed 0.7%, signaling solid momentum for the current quarter. 
• Gains were partly price-driven — gasoline, food, and apparel costs all rose — leaving “real” growth more modest. Still, discretionary categories like online shopping (+2.0%) and clothing (+1.0%) outperformed. 
• The latest retail sales report underscores resilient U.S. spending, but growth is increasingly concentrated among higher-income households, raising concerns that inflation, weaker labor gains, and softer sentiment could erode momentum into year-end. 

The Week Ahead 

• Investors are bracing for the Personal Consumption Expenditures (PCE) price index, due September 26th. The Fed’s preferred inflation gauge is expected to show inflation still running above target and could shape expectations for rate cuts later this year. A higher-than-expected reading could upend bets on policy easing and jolt stocks and bonds.
• Also watch for U.S. housing data (new home sales and pending sales, September 24th-25th) as a gauge of household strength; consumer sentiment updates (Conference Board and University of Michigan, September 23rd and 26th) for spending momentum; and weekly jobless claims (September 25th) to track labor resilience. 

That’s a wrap for this week. The bigger picture still matters most, and we are here whenever you’d like to review your strategy or discuss next steps. 

September has a reputation for testing investors, so some turbulence shouldn’t come as a surprise. Staying nimble around data releases and Fed commentary — while keeping a steady focus on long-term goals — is a strong choice. As always, if you have questions or concerns, don’t hesitate to reach out!
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Wall Street rallied last week as hopes for a Federal Reserve rate cut gained momentum, with stocks, bonds, and currencies responding to softer jobs data and persistent inflation. 

All eyes are now on policy signals, which could spark volatility if new surprises emerge — but for now, optimism prevails. Read on for key developments:

Stock Index Performance

• The S&P 500 climbed 1.59%. 
• The Nasdaq 100 gained 1.86%. 
• The Dow Jones Industrial Average rose 0.95%. 

Consumer Inflation 

• U.S. inflation accelerated in August, with the Consumer Price Index (CPI) rising 2.9% from a year earlier, up from 2.7% in July and the highest since January. The reading matched forecasts, while monthly CPI advanced 0.4%, above the 0.3% consensus. 
• Shelter costs climbed 0.4% in August, remaining the largest driver of inflation, while food prices advanced 0.5% and energy rebounded 0.7% on higher gasoline and electricity. Core CPI (which removes more volatile food and energy) rose 0.3% on the month and 3.1% annually, matching July’s pace. 
• The Producer Price Index (PPI), a key gauge of pipeline inflation, unexpectedly fell 0.1% in August — the third deflationary reading this year — defying Wall Street’s call for a 0.3% increase. Core PPI also slipped 0.1%. 

Policy Expectations & Market Sentiment 

• A Reuters poll shows 98% of economists expect a September cut, with many now projecting up to three reductions this year as job growth slows and jobless claims hit a four-year high.
• Traders largely expect a 25-basis-point (0.25%) move at the September meeting, though some see a chance for a 50-basis-point cut if labor data weakens further ahead of the meeting. 
• Despite inflation running above target at 2.9% year-over-year (core 3.1%), soft job creation and rising unemployment are pushing the Fed toward easing, with Powell signaling a willingness to tolerate hotter prices to support the labor market. 

The Week Ahead 

• Markets remain optimistic, but this could reverse quickly. Any unexpected policy shift at the Federal Open Market Committee (FOMC) meeting on Sept. 16-17 or hotter-than-expected inflation data may reignite volatility and sector rotation. For now, the focus is on policy signals and sectors likely to benefit from looser financial conditions. 
• Wall Street will also be watching August retail sales (released on September 17) for clues on consumer spending strength; fresh housing reports (released on September 18) for updates on residential activity; and the latest jobless claims (released on September 18) to track labor market trends. These data points, alongside the Fed’s rate decision, will guide market sentiment. 

That’s all for this week’s update. With markets moving swiftly, conflicting headlines and trends are normal as events unfold. Remember, your planning should prioritize long-term goals, and we are always here to help. If you have questions about your investments or financial strategy, please reach out any time.

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As September begins, financial markets and U.S. economic activity are being influenced by record-high equity valuations, growing optimism for potential Federal Reserve rate cuts, continued resilience in the consumer sector, and a weaker-than-expected August jobs report. Below are the key developments to keep in mind.

Stock Index Performance 

• The S&P 500 gained 0.33%.
• The Nasdaq 100 rose by 1.01%.
• The Dow Jones Industrial Average dipped 0.32%.

Labor Strain 

• The U.S. labor market lost momentum in August, adding only 22,000 jobs compared with forecasts of 75,000 — the slowest pace of growth since the pandemic. Revised figures also showed a net job loss in June, the first since 2020, and a downward adjustment to July’s gains.
• The unemployment rate rose to 4.3% in August, its highest level in nearly four years. The number of unemployed increased by 148,000 compared with July, highlighting growing signs of labor market weakness.
• Wage growth slowed to 3.7% year over year in August, the weakest pace since July 2024, while job openings fell to an 11-month low. For the first time since the pandemic, the number of unemployed surpassed available positions. 

Gold vs. Dollar 

• Gold increased over 3% last week and has surged 38% year-to-date, reaching record highs near $3,600 per ounce. This impressive performance positions 2025 as potentially gold’s best year since 1979 — and far ahead of most major asset classes so far this year. 
• Gold’s performance has been supported by central bank purchases, particularly from China, as investors seek safer alternatives to dollar assets and portfolio diversification. Rising political tensions, concerns over Fed independence, and global macro uncertainty have also driven strong inflows. 
• The U.S. dollar fell 0.6% on September 5 to extend its period of weakness, with the U.S. Dollar Index near its lowest levels since June and down 3.6% over the past year. Expectations for Fed rate cuts and broad geopolitical trends are weighing on the currency. 

The Week Ahead 

• On September 10th, the Producer Price Index (PPI) will provide an early signal of inflation trends, with economists anticipating a 0.3% monthly increase. On the next day, the Consumer Price Index (CPI) is expected to show a 0.3% monthly gain and a 2.9% increase year over year. 
• Markets remain highly sensitive to potential policy signals ahead of the Fed’s upcoming meeting on September 17th. Expectations for a rate cut are building, driven by signs of a softening labor market and easing inflation. 

That’s all for this week’s update. In today’s fast-moving markets, it’s natural to feel the impact of shifting trends and headlines. Please know that we are always here to help you stay focused on your long-term goals. If you have any questions about your portfolio or overall financial plan, don’t hesitate to reach out.

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August delivered fluctuations in U.S. markets, with rallies and pullbacks driven by shifting Fed policies, durable earnings, and stubborn inflation. The economy remains strong, but consumer spending and labor data show signs to watch, as tariffs push up prices. 

With so much change, now’s a smart time to check in on what’s steering the markets. Below are the key takeaways. 

Major U.S. Stock Indices 

August’s stock market rally was fueled by outsized gains in select tech leaders, with artificial intelligence dominating. Despite resilient economic growth, investor sentiment was tempered by uncertainty arising from tariffs and fiscal policies. 

Through it all, headline indices traded in all-time high territory. Overall:

• The S&P 500 gained 1.91%.
• The Nasdaq 100 rose by 0.85%.
• The Dow Jones Industrial Average jumped 3.20%.

Economic Growth 

• The U.S. economy surged in the second quarter of 2025 with gross domestic product (GDP) growing at a 3.3% annual rate, topping earlier estimates and reversing a first-quarter contraction. The rebound was fueled by a sharp drop in imports after businesses loaded foreign purchases in Q1 ahead of new tariffs.
• Consumer spending and investment in AI provided additional support in Q2, though private investment fell at the steepest rate since the pandemic. Economists still caution that uncertainty over trade policy, lackluster business investment, and the prospect of inflation could cloud the economic outlook heading into the fall. 
• In fact, some forecasts say that U.S. GDP growth will slow to 1.1%-1.4% in 2025. Though corporate earnings remain solid overall, headwinds (or negative factors) are emerging. This is especially a concern for businesses without strong pricing power (i.e., the ability to determine the price of the good or service). 
• Consumer spending is showing signs of cooling as households become more cautious, especially lower- and middle-income consumers. 
• Labor market signals are mixed. The unemployment rate remains healthy near 4%, but recent job data revisions deleted 260,000 previously reported positions, raising questions about the job market’s strength. 

Deflating Sentiment?

• Consumer confidence slipped in August as Americans grew jittery about jobs and rising prices. The Conference Board’s index fell to 97.4 from 98.7 in July, with the expectations component dropping to 74.8 — below the 80 threshold that historically signals recession trouble. Job availability concerns have persisted for eight months. 
• The Board’s Leading Economic Index continued flashing red signals, declining for its fourth consecutive month and triggering recession warnings. The six-month growth rate remains negative at -2.7%, weighed down by weak consumer expectations and shrinking new orders, though partially offset by rising stock prices. 
• University of Michigan consumer sentiment also soured, falling to 58.2 in August from 61.7 and snapping a four-month winning streak. Rising inflation fears and deteriorating big-ticket purchase conditions drove the decline, while year-ahead inflation expectations spiked to 4.8% from 4.5%. 
• The data will likely weigh heavily on Fed officials at September’s pivotal policy meeting. 

Fed at Crossroads 

• Core Personal Consumption Expenditures (PCE) showed inflation rising to 2.9% year-over-year in July, the highest level since February. While monthly core PCE rose 0.3% as expected, personal income and consumer spending outpaced inflation, rising 0.4% and 0.5%, respectively. 
• The Fed held rates steady at 4.25 to 4.5% throughout August, sticking to a data-dependent approach. The next move likely hinges in part on September’s inflation and payrolls report. 
• Policymakers face a delicate balance, weighing moderating inflation data against ongoing risks tied to trade tensions and fiscal expansion. Markets are anxiously awaiting the first Fed rate cut.

Rapid Change

This is certainly a transitional period. The economy is growing but faces undeniable risks, such as inflation, consumer spending pullback, and policy uncertainty. Portfolios could potentially benefit from an emphasis on quality, resilience, and diversification, favoring sectors with pricing power, stable earnings, low debt, and exposure to AI innovation. 

August’s numbers confirm U.S. strength but also reveal the importance of managing risk. Heading towards the final quarter of 2025, a patient, disciplined strategy focused on balancing opportunity with protection remains ideal. 

As always, if you’d like to discuss the current outlook or adjust your strategy based on recent developments, please reach out. We are here to support you. 

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As summer winds down, the stock market is anything but laid-back. Major U.S. indices ended the week with a bang, driven by Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, signaling a high probability of an interest rate cut in September. Here are the main things you need to know.

Stock Index Performance

• The S&P 500 gained 0.27%.
• The Nasdaq 100 slid by 0.90%.
• The Dow Jones Industrial Average jumped 1.53%.

Fed Watch

• On Friday, Powell noted that while the U.S. economy has shown resilience, downside risks to employment are rising, warranting a more accommodative policy stance. But he stopped short of a firm commitment, emphasizing the Fed’s data-dependent approach.
• Markets rallied and rate-sensitive assets surged for the day, though some analysts warn that over-optimism could be risky if upcoming jobs or inflation data fail to meet expectations.
• According to the most recent data, inflation remains elevated, with core Consumer Price Index (CPI) and core PCE (Personal Consumption Expenditures) running just above 3% — even as the Fed has kept interest rates high to cool price pressures. However, Powell said the risks to the job market may require the Fed to cut rates anyway.

Consumer Data

• Fitch Ratings cautions that U.S. consumer spending is set to decelerate sharply in the second half of 2025, amid a weakening labor market and tariffs potentially driving up costs. With the possibility of disposable income growth slowing and cost pressures mounting, Fitch sees a “deteriorating” outlook for retail and consumer sectors.
• Walmart has warned of rising input costs and sees margin pressures mounting, especially as lower- and middle-income customers shift to cheaper products. Target, more exposed to discretionary categories, said price hikes are a last resort.
• U.S. existing home sales rose 2% in July to an annual rate of 4.01 million units — the largest gain since February and above forecasts. This was driven by a slight dip in mortgage rates, slowing home price growth, and the biggest housing inventory in five years.

The Week Ahead

• Nvidia (NVDA) reports earnings on Wednesday. As a leading force in the tech sector and broader market, Nvidia’s results and guidance are expected to be major market movers, especially given its AI leadership and the recent rebound in semiconductors.
• Release of the U.S. Personal Consumption Expenditures data, the Federal Reserve’s preferred inflation gauge, is set for Friday (Aug 29). Markets are pricing in a near-certain cut, but the Fed insists its decision will hinge on upcoming data rather than political pressure.

That’s it for this week’s update! If you have any questions about strategy, near- or long-term, feel free to contact us.

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It’s certainly been an eventful time for the economy and stock market. Markets are hitting record highs, but inflation and policy uncertainty are tempering expectations for near-term rate cuts. Amid a busy end to the summer, below are the top takeaways from the last week.

Stock Index Performance

• The S&P 500 rose by 0.94%.
• The Nasdaq 100 gained 0.43%.
• The Dow Jones Industrial Average climbed by 1.74%.

Inflation

• Headline inflation stayed put at 2.7% in July, surprising forecasters as tariffs only nipped at consumer prices. It’s also notable that falling energy costs gave wallets a break at the gas pump. 
• Under the surface, however, core inflation jumped to 3.1%, its hottest level since winter, thanks to soaring prices for goods and services like used cars and medical care. 
• While tariffs haven’t yet sparked sticker shock in autos or appliances, some economists caution that surging prices in other key goods may show that inflation’s reach is spreading. 

Labor Market

• While the unemployment rate is still low at 4.2%, slowing payroll growth and job creation fuel speculation that the Federal Reserve may cut rates to support employment, even as inflation lingers. 
• In regions affected by tariffs and in sectors with rising input costs (e.g., manufacturing and construction), employers are showing caution regarding wage increases and hiring. 
• Despite these headwinds, wages have outpaced inflation on a year-over-year basis for 27 consecutive months, underscoring a positive trend for American workers.

Consumer Sentiment

• Consumer sentiment fell in August for the first time in four months, despite July retail sales rising 0.5% month-over-month and signaling stabilizing spending. The decline may reflect inflation concerns, Fed policy uncertainty, and the pass-through of tariff-driven price pressures. 
• While fears of worst-case recession scenarios have faded, most consumers expect inflation and unemployment to deteriorate in the coming months. 

The Week Ahead

• The Jackson Hole Symposium begins Thursday, August 21, with markets focused on Federal Reserve Chair Jerome Powell’s Friday address. Investors will watch closely for guidance on the timing and pace of policy easing.
• The U.S. housing market is still stagnant due to high rates. Upcoming data, including housing starts & building permits (Aug. 19) and existing home sales (Aug. 21), will offer constructive insight into sector conditions. 

That’s it for this week’s update! August often springs with unforeseen surprises, so if you have any questions or concerns, you can always reach out.

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Tariff news once again dominated last week’s headlines amid major developments. Read on for highlights of what you should know.

Stock Index Performance

• The S&P 500 climbed by 2.43%.
• The Nasdaq 100 jumped 3.73%.
• The Dow Jones Industrial Average gained 1.35%.

Tariffs & Tech Industry Impact

• President Donald Trump’s reciprocal tariffs hit dozens of U.S. trade partners on August 7th, with most countries now facing a blanket 10% rate and some, including Brazil and India, seeing duties up to 50%. While the European Union and Japan secured partial reprieves, others are locked in tense negotiations.
• Trump also announced a 100% tariff on non-U.S. computer chips, potentially affecting products like smartphones and electric vehicles. Exceptions apply to companies relocating chip production to the U.S., however.
• This favors domestic manufacturers like Apple and Nvidia and could stir inflation for consumer electronics. But subcomponents and raw materials crucial for manufacturing still face elevated tariffs, presenting potential supply chain price hikes and demand for automation.

Stock Market Rolls On

• Shrugging off tariff news, U.S. stocks continued their upward trajectory. The Nasdaq Composite surged 1% on Aug. 8, closing at a new all-time high, while the S&P 500 increased 0.8%, capping a positive week for all major indices.
• Market optimism rose on strong quarterly corporate earnings. More than 80% of S&P 500 companies topped estimates, with notable contributions from Apple and other tech giants.
• Corporate buybacks also reached historic levels, with U.S. firms announcing $166 billion in stock repurchases for July, a sign of business confidence in future growth.

The Week Ahead

• The upcoming release of last month’s Consumer Price Index (CPI) and Producer Price Index (PPI) data on August 12th and 14th, respectively, will be critical, as these will guide expectations for Federal Reserve policy and set the tone for both bond yields and equity volatility.
• Investors await fresh signals from Fed officials ahead of September’s policy meeting. Rates have still been unchanged at 4.25%–4.50%, with July inflation running at 2.7%. Even a slight shift in tone on rate-cut timing or balance-sheet plans could jolt equity and bond markets.

That’s it for this week’s update! If you’d like to delve into these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out.

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July was chock-full of key economic developments, from monumental legislation and trade deal fluctuations to a tense Fed meeting and labor market weakness.

With all of this activity, here is a quick overview of what to know as we head into August. Take a look below, and as always, reach out with any questions. 

Major Stock Index Performance

Volatility remained low, and the S&P 500 and the Nasdaq 100 hit record highs in July, as trade policy volatility was the defining force for bulls and bears. Overall:

• The S&P 500 rose 2.2%.
• The Dow Jones Industrial Average declined by 0.2%.
• The Nasdaq 100 increased by 2.4%.

One Big Beautiful Bill Act & Crypto Legislation

• The “One Big Beautiful Bill Act” was signed into law on July 4, 2025. It is set to shepherd in numerous financial and tax changes for Americans. Notable aspects of the legislation include the permanent increase of estate and gift tax exemptions, the extension of lower income tax rates, and a higher standard deduction. It also introduces deep cuts to Medicaid and tighter restrictions on who qualifies for Medicaid. 
• The “Genius” Act, officially known as The Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025, was signed into law on July 18th. It’s the first federal law focused specifically on dollar-backed stablecoins, a type of cryptocurrency designed to maintain a stable value by being backed 1:1 by traditional assets like U.S. dollars or Treasury bills. Though the law provides some regulatory clarity and potential investor benefits, stablecoins carry inherent risks, including fewer consumer protections and potential technological and operational vulnerabilities.

Trade Deal Progress & Effective Date Extension

• As the now-extended August 2nd tariff deadline approached, the United States made several key trade deals, including those with the United Kingdom and Japan.
• Markets have responded positively to the good news, though an August 7th tariff deadline looms for the countries without a deal, a majority that includes important trading partners like China and Mexico.

GDP Strength & Earnings Season

• Following a 0.5% decline in gross domestic product in the first quarter of 2025, GDP rebounded in the second quarter, posting a 3% rise. The first-quarter decline was fueled by companies rushing to import goods ahead of the introduction of tariffs; Imports are subtracted from growth in the GDP figure.
• As of August 1st, 66% of S&P 500 companies have reported actual earnings. 82% have reported actual earnings per share (EPS) above estimates, above both the five- and ten-year averages. Typically seen as good news for Americans who are investing in the stock market and for the overall economy, earnings were overshadowed by weak jobs data at the start of the new month.

Inflation Data Puzzle & Consumer Vibes Improve 

• June inflation data, released in July, offered a mixed picture. Consumer Price Index data showed a 0.3% increase in consumer pricing, the largest monthly increase since January. The Producer Price Index was flat for June, with a 0.0% overall change in producer prices. Remember, producer prices (or wholesale prices) tend to be leading indicators, meaning they may signal what’s to come in other inflation data like CPI.
• June retail sales, released in July, posted a positive result, with a 0.6% monthly rise that soundly beat both expectations for a 0.1% monthly rise and the prior month’s 0.9% decline. One important caveat: this reading does not control for inflation, meaning some of the increase could be tied to rising prices caused by tariffs. 
• Following nearly a half year of decline in consumer sentiment, the University of Michigan Index of Consumer Sentiment increased in both June and July. The Conference Board’s consumer reading also rose in July, though consumer sentiment remains lower across the board than last year’s readings.

Federal Reserve Meeting

• The Federal Reserve held a policy meeting on July 29th-July 30th, leaving its benchmark interest rate in the 4.25%-4.5% range.
• However, it’s important to highlight that two members of the Fed’s Board of Governors voted against the decision, preferring a 0.25% cut instead. This is the first time in over 30 years that multiple governors have dissented on a policy decision. While the Fed operates independently of the White House, the rate cut decision – and the dissent – come amid calls for rate cuts from President Donald Trump and his administration.
• In the post-meeting press conference, Federal Reserve Chair Jerome Powell said that higher tariffs are beginning to show up in the prices for some goods. He also acknowledged the impact may only be felt as a one-time price adjustment, adding that it’s too soon to know their full impact.
• In the press conference, Powell described the labor market as “broadly in balance,” a move away from previous characterizations of a tighter labor market. However, he noted there was a chance that future conditions could worsen. Powell’s comments came before the release of the July jobs report, which showed significant softening of the labor market.

Weak Jobs Data Points to Economic Softening 

• According to the July jobs report, employers added only 73,000 jobs in June, and May and June jobs numbers were also revised down in a stunning fashion. In an unprecedented move, President Trump fired the Bureau of Labor Statistics commissioner following the July data release.
• May’s estimated data, which previously showed a gain of 144,000 jobs added, was revised down to just 19,000 jobs added. June’s jobs number, which showed a preliminary figure of 133,000 jobs added, was revised down to just 14,000 jobs added.
• With these revisions, the labor market has now shown the weakest job creation in decades outside of recessions, and June’s data is the weakest since mid-pandemic in December 2020. Since recessions are typically proclaimed after a recession has already begun, it is currently unclear whether one is coming or whether we’re in a recessionary environment already. Take note: long-term investing remains a strong approach to weather economic market ups and downs.

A lot happened in July. Indeed, maintaining a long time horizon can help investors avoid making hasty decisions with lasting consequences. If you have questions about the economy, the market, or your portfolio, we are always here as a resource for you.

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Links to third-party websites are for general information purposes only and do not constitute any offer or solicitation to buy or sell any services or products of any kind. The other parties are responsible for the content on their website(s). You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. They are not intended and should not be relied upon as investment, insurance, financial, tax, or legal advice.