July 2025 Market Review & Commentary

    For the month of July, the overall market indexes advanced on the strength of trade-related developments and many of the second-quarter corporate earnings, setting several new record highs for the major indices. The S&P 500 Index recorded a +2.17% increase, while the Dow Jones Industrial Average posted a much more modest gain of +0.08%. Stock valuations are beginning to look a little stretched at 22x their next 12-month earnings, so earnings will be heavily scrutinized, and this alone will keep eyes glued to potential effects of tariffs.

    Early in July, a favorable June employment report from the Bureau of Labor Statistics provided momentum, indicating resilience in the U.S. economy despite continued trade and geopolitical uncertainties. However, investor sentiment shifted following the White House’s notification to multiple countries of new tariffs effective on the 1^st of August. Additional announcements of tariffs on seven more nations further pressured stocks, though markets gradually rebounded as expectations grew for potential moderation of these measures.

     Throughout the latter half of July, positive interpretations of trade negotiations, economic data and corporate earnings reports supported the steady return of gains in the market. This was further helped with the announcement of an agreement between the US and Japan.

      In the final trading days of the month, market activity was largely stable as a trade agreement was announced with the European Union and negotiations seemed to stall with China. While the Federal Reserve is not scheduled to hold a meeting in August, everyone can expect relevant commentary throughout the month. The minutes from the July meeting will be released on August 20^th and the annual Economic Policy Symposium in Jackson Hole will begin on August 21^st.  With recent corrections to the monthly employment data, the presumption of a September rate cut becomes increasingly likely.

     At the sector level, five of the eleven sectors posted gains with Utilities (+4.91%), Technology (+3.67%) and Industrials (+3.04%) leading the way in July.  While the remaining sectors lagged with Healthcare (-3.23%) and Consumer Staples (-1.47%) pulling up the rear.