August 9, 2025 Market Update

U.S. stocks were mixed this week as investors weighed a steady stream of corporate earnings reports against new tariff developments.  Gains in large technology names helped offset weakness in some industrial and consumer companies threatened by ongoing tariff hikes.

Treasury yields remained choppy, as investors evaluated growing expectations for a Federal Reserve rate cut in September against the softer demand in treasuries at a recent auction.  The yield curve remained relatively flat as credit markets held steady, with investment-grade spreads little changed.

This week’s market activity suggests Mr. Market remains cautiously optimistic.  The S&P was supported by growth stocks, while the volatility in Treasury yields signaled that fixed income investors remain cautious about the economic outlook.  Taken together these developments suggest investors are trying to balance hopes for supportive monetary policy with the recognition that trade and inflation developments could shift the economic outlook quickly.

Earnings season continued this week with a mix of encouraging surprises and cautionary reports.  Many companies reported stronger-than-expected results, prompting analysts to revise upward their projections for S&P 500 earnings growth.  But the market reaction to individual reports was often volatile, highlighting how sensitive investors remain to company-specific narratives.

One recurring theme in earnings calls was tariff concern.  While the initial impact has been muted—thanks in part to inventory stockpiled before tariffs took effect—that buffer may be running low.  If input costs begin to rise and profit margins come under pressure, the ripple effects could show up in both corporate guidance and inflation rates.

That scenario could pose a challenge for investors.  Markets currently expect the Federal Reserve to cut interest rates as early as September, but a resurgence in inflation would complicate that outlook.  Volatility, which has been unusually subdued, could quickly return if the rate path becomes less certain.

Periods of calm don't last forever.  That makes it a good time to reflect on how your portfolio is positioned.  If you're confident in your ability to stay the course through choppy markets and extended drawdowns, sticking with your current plan may make sense.  But if the prospect of renewed volatility would tempt you to exit riskier positions at the wrong time, it may be worth making adjustments now to help you stay invested when it matters most.

That’s all for now.  Have a great weekend and invest wisely my friends.