Happy Friday. We made it to August: school starts later this month, summer’s end is in sight, and most importantly we’re finally getting into football season. Let’s talk about the markets for now.
📊 Weekly Market Recap
- S&P 500 return Year to Date were approximately 6.30%
- S&P 500 return over the past month were approximately 0.17%
- S&P 500 return over the past 7 days were approximately -2.36
This Week in the Markets- 5 Things to Know
- Job growth stalls. Just as of this morning we got note that the U.S. economy added just 73,000 jobs in July, well below expectations. At the same time, the unemployment rate edged up to 4.2%, and prior months were revised sharply lower painting a weaker labor picture than previously thought. Pretty much a horrid report any way you look at it.
- Fed under pressure. With inflation cooling and hiring slowing, markets see rising odds of a Fed rate cut later this year. This was almost entirely off the table when we had a great GDP number a few days ago, but this morning’s report puts it squarely back in play.
- Tariff uncertainty. We took a few month off from talking about, but now they’re back. Tariffs. New U.S. tariffs on Chinese imports have reintroduced inflation risk…again. Higher costs for goods could offset disinflation progress, forcing the Fed to balance weaker growth against stickier prices.
- Earnings divergence. Big tech leaders such as Microsoft and Meta delivered extremely strong results, while Amazon and several consumer-facing names showed signs of strain. Market leadership remains narrow, making equity gains more fragile in the tech sector. Basically the very top of the market is dragging everyone along.
- Shifting market tone. Investors are leaning toward defensive and emerging markets as uncertainty builds with inflation. Leadership outside of mega-cap tech is limited in every other sector, but luckily passive index strategies remain concentrated in a handful of companies and small stocks still are grasping slight greens of gains.
The July jobs report makes it clear the economy is losing some steam. Hiring slowed to the weakest pace in years, and unemployment is creeping higher, even if it’s still low by historical standards. Add in downward revisions to earlier reports, and it’s clear the labor market doesn’t have the cushion it once did. On the flip side, the latest GDP reading came in strong, showing the economy is still expanding at a solid clip, a little mixed coming from slowing pace of jobs. For the Fed, this ups the odds of rate cuts later in 2025 (possibly September), but it’s honestly a tricky call. Inflation has cooled but isn’t fully tamed, and the return of tariffs on Chinese imports and now other countries have risk of pushing prices back up. That leaves the Fed walking a tightrope trying to support a softer job market without sparking another inflation flare-up.
On top of that, trade uncertainty and uneven market performance are keeping investors on edge. Tariffs could push costs higher and delay Fed cuts, even as growth slows. The stock market looks lopsided—big tech is still driving gains, but the rest of the market is lagging even with new S&p Highs. General investors are leaning toward defensive plays or looking overseas.
The takeaway…job growth is slowing, tariffs are still adding pressure, and the Fed is cautious. Heading into Q4, expect plenty of volatility. Now’s the time to make sure you’re well positioned as we get closer to the fall.
S&P 500 SECTOR SNAPSHOT- Past Month
Top 5 Gainers In the S&P 500 This Month
What To Watch In August
- Inflation update (Thursday, Aug 8): The July CPI report will be the key test of whether disinflation remains intact despite tariffs.
- Fed communication: Several officials are scheduled to speak — markets will parse every word for clues on timing of cuts.
- Earnings outside tech: Tech has been generally great, but there are other major financials from companies that will provide insight into consumer resilience and global demand.
- Tariff follow-through: Any updates on the scope and implementation of trade measures could affect expectations for inflation and sector performance.
- Global growth signals: Data from Europe and China, including trade balances percentages and industrial output will help shape views on whether international markets can sustain their recent out-performance.
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