Market Commentary - August 2025

August 2025

July Market Recap: Continued Momentum & Resilience

July saw continued momentum from April and June, with the S&P 500 and Nasdaq posting additional gains of 2.2% and 3.7%, respectively, setting multiple all-time highs. Small-cap Russell 2000, and mid-cap S&P 400 posted solid gains in July as well, though the Russell 2000 still finished down 0.8% YTD. Meanwhile, the Dow Jones Industrials eked out a slight gain for the month. 

Corporate earnings have held up better than expected and trade deals were reached with the EU and Japan ahead of the August 1 deadline. Trade discussions with China and India remain ongoing.

Developed international markets moderated slightly in July (-1.5%) after strong First Half performance, though the MSCI EAFE index posted new highs during the month. Emerging Markets continue to show strength amid a weaker dollar and extended First Half gains in July adding 1.7%. 

President Trump’s OBBB Act was signed into law on July 4. While expanding tax cuts and fiscal stimulus, which fueled stocks in July, the projected long-term debt impact has unnerved bond markets, pressuring yields higher, especially on the long end of the curve. The Fed met again July 29-30 and left interest rates unchanged, as expected, despite President Trump’s pressure to cut rates and persistent talk of replacing Chair Powell before his term ends in May 2026, which has raised concerns in the bond market. However, markets still anticipate a potential cut in September.  

August Market Update: New Highs and Powell's Jackson Hole speech sparks Global Rally 

By mid-August, stocks extended gains with the S&P 500, Nasdaq, and international benchmarks reaching new highs. Economic data proved mixed—CPI inflation cooled, but PPI ran hotter, and jobs data softened with rising unemployment. The turning point came on August 22, when Fed Chair Powell’s dovish comments at Jackson Hole fueled expectations of a September rate cut. Central Bankers across the globe meet annually in Jackson Hole, WY at the Kansas City Fed's Economic Policy Symposium to discuss monetary and economic policy, and the Fed Chair’s speech has been known to pivot markets. It didn't disappoint this year for market bulls. Markets surged in response, with the Dow rocketing 846 points, or +1.9%, and closed at an All-Time High, while the S&P 500 and Nasdaq jumped +1.5% and +1.9% respectively; Russell 2000 small-caps led the charge on lower interest rate expectations gaining +3.9%, while S&P 400 mid-caps also soared +2.7%. International stocks surged as well, with the MSCI EAFE index gaining +1.2% on the Jackson Hole comments as well, with the prospects of the US joining other central banks who have cut interest rates in 2025. Bonds rallied with yields easing from July’s highs. The Bloomberg Agg Bond index gained +0.5% and the 10-year yield fell to 4.26%; 

The S&P 500 has surged +29.8% from the April 8 tariff announcement low, while Nasdaq leads all major US indexes gaining +40.8% (ending 8-22-25).

The Outlook:  

We've continued to witness a swift and robust recovery from April’s tariff-induced lows and further imbeds the importance of discipline and diversification for investors.  As noted above, Fed Chair Powell's Jackson Hole comments on August 22 sparked a global market rally on raised optimism of a 0.25% policy rate cut at the Fed's September FOMC meeting. Yet, economic data between now and then will weigh on the decision.  Market valuations, mixed economic data, continued global trade tensions and geopolitical risks mean volatility is likely to persist.

We continue to advise investors stay diversified, patient, and focused on long-term goals.

Call your Nelson Advisor today at 800-345-7593 to discuss any concerns and review your portfolio.  

~Your Nelson Securities Team     

*Past Performance is No Guarantee for Future Results; This article is for informational purposes only and does not constitute investment advice.