August 8, 2025

U.S. equity markets moved higher in July with the S&P 500 now up a sharp 28% from the April 8th lows. Cyclical and lower quality stocks have led the rally from April. The S&P gained 2.2% during July.  Technology (+5.2%), utilities (+4.9%), and industrials (+3.0%) were the best performing S&P sectors, while health care (-3.3%) and staples (-2.4%) were the worst performing sectors for the month.

Recent macro data have shown improvement (retail sales, service purchasing managers’ indices, industrial production, initial claims) and suggest an economy that continues to grow modestly.  One persistent weak spot has been the housing sector which remains captive to relatively high mortgage rates.  There were some signs of the potential inflationary impact of tariffs in the June inflation data: certain imported goods such as furniture, apparel, and recreational equipment.  Investors will be watching inflation numbers carefully over the coming months as seasonal adjustments go away and more of the tariff impact possibly flows through to final prices.  The Fed remains on hold awaiting greater clarity as well on prices as well, or so he says.