August 2025 Market Review & Commentary

We hope you're doing well and enjoying the cooler temperatures as much as we are. The arrival of cooler weather often reminds all of us that we have entered the back-to-school season. With Channing beginning his junior year of high school just a few weeks ago, we're noticing a significant change from the usual back-to-school routine to a new focus on SAT scores and AP class planning for college admissions. While this transition is a bit unsettling for us as parents, it's not too different from the shift occurring within the Federal Reserve. Although our transition might be on a much smaller scale compared to the entire health of the US/Global Economy, I like to think we're managing it as well as Fed Chair Powell.

In August, markets advanced as investor attention centered on the Federal Reserve's interest rate decisions. The S&P 500 gained +1.91%, the Nasdaq rose +1.58%, and the Dow Jones Industrial saw an increase of +3.20%.

Throughout the year, the Federal Reserve has maintained interest rates at current levels due to persistent inflation pressures linked to tariffs. Robust employment figures and low unemployment permitted the central bank to delay policy changes pending further data. The July jobs report, however, indicated slower job creation and an increase in unemployment to 4.2%, drawing attention to decelerating economic growth. At the Federal Reserve’s annual Jackson Hole meeting, Chair Powell recognized the necessity for policy adjustment and signaled the possibility of a rate cut at the upcoming September 17th session. This anticipated shift contributed to higher trading activity in both stocks and bonds, resulting in a rally with the S&P 500 closing above 6,500 during the month.

As August concluded, trading was measured ahead of Labor Day, but the month ended with (8) out of the (11) S&P 500 sectors posting gains. Both the Technology (-0.11%) and Utilities (-1.60%) lagged behind the markets, while Communication Services (+3.71%), Consumer Discretionary (+4.66%) and Financials (+3.09%) led the markets.  

Markets and Investor focus now turns to the Federal Reserve's policy meeting concluding on September 17^th , with expectations regarding interest rate adjustments and future guidance. At Jackson Hole, Chair Powell placed greater emphasis on employment risks related to inflation, signaling an evolution in policy priorities. With this stance shift to focusing on “employment” firmly in place, the expectations are for a rate cut and the five-year tightrope balancing act, continues….