Quick Take: Stocks pressed to new highs as tech shares gained ground.Bond yields moved lower (prices higher) as odds increased that the Federal Reserve would cut interest rates in September. [1],[2]
August didn’t just push stocks to fresh records – it added to the texture of the rally. Although tech stocks continued to set the tone, growing optimism over a September rate cut pulled the rest of the market higher as well.
On the macro front, faster-than-expected GDP growth for the 2nd quarter kept the positive mood intact, as the economy’s scorecard gave investors some comfort. Against this backdrop, the S&P 500 rose 1.9% in August, notching its fourth consecutive monthly advance. [3],[4],[5]
Earlier in the month, a much weaker-than-expected jobs report spurred demand for U.S. Treasuries.[6] The Labor Department revised its payroll numbers for May and June downward by 258,000 jobs, the largest revision over 2 months since the height of the pandemic.[7] Because the data is based on a voluntary monthly survey, some establishments often respond late.[8] When the late responses from different industries skewed negative, the combined effect produced a larger downward revision.
Rate cut expectations also sent Treasury yields lower (prices up) in August —especially short-term yields that track Federal Reserve (Fed) policy most closely.[9] By contrast, longer-term yields are more subject to inflation expectations and the amount of debt the Treasury needs to sell. As a result, shorter-term yields fell faster than longer-term rates. Even with easier short-term monetary policy on the horizon, concerns over inflation and the government’s future borrowing needs remain.[10]
New Highs
Source: https://www.reuters.com/markets/europe/us-small-caps-quietly-notch-historic-outperformance-vs-tech-2025-08-28/
U.S. stocks finished the month near record levels, with tech stocks continuing to lift the index. [11] By mid‑month, the “Magnificent 7” mega-cap tech stocks accounted for a record-topping 34% of the S&P 500’s value, powered by strong earnings. [12] All seven posted positive second-quarter earnings surprises and exceeded estimates by 10.5%, versus 7.7% for the broader S&P 500 index. [13]In fact, the Mag 7 delivered earnings growth in the second quarter of 26.6%, compared to an expected 13.9%. [14] While earnings growth is expected to slow in the next few quarters, analysts are still forecasting double digit growth. [15]
Source: https://insight.factset.com/magnificent-7-companies-reported-earnings-growth-above-25-for-q2
At the same time, breadth improved in August, as more companies participated in the market rally. The equal‑weight S&P 500 — an index where each member is equally weighted — rose roughly 2.7% for the month to log its longest winning streak since May 2021. 1[6]Small-cap stocks also quietly posted historic outperformance versus big‑tech benchmarks late in the month.[17]
Federal Appeals Court Weighs In
In the last days of the month, a federal appeals court struck down the administration’s global tariffs, upholding a lower-court decision from May. [18] The court ruled by a 7-4 majority that the President had overstepped its use of emergency powers to rewrite US trade policy. [19] For now, so-called reciprocal tariffs will be allowed to remain in place through mid-October to give the White House time to appeal to the Supreme Court. [20] Though the Supreme Court may take the case in the fall, a resolution might not occur before the end of the year. [21]
The impacted measures include baseline 10% tariffs on most countries, along with steeper “reciprocal tariffs” and additional tariffs on Canada, China, and Mexico. These account for 70% of expected tariff revenue for 2026. [22] Notably, other levies imposed under separate authorities on the auto, steel, aluminium and copper industries, among others, are not affected [23]
Despite the ups and downs, recent research suggests that trade‑policy uncertainty has had a lower impact on economic activity than previously feared. reducing one of the year’s headline drags. [24] With concerns of tariffs easing, the market can be more optimistic that tax cuts and deregulation could help lower business costs and support growth. [25]
Dovish Tone
Powell’s remarks at the Fed’s annual August conference at Jackson Hole, seemed to address expectations for a rate cut in September by noting “the shifting balance of risks may warrant adjusting our policy statement.” [26] As a result of “sweeping changes” in tax, trade, and immigration policies, Powell noted that downside dangers are rising despite a resilient labor market. [27] This came after a sharp slowdown in hiring in July, along with the revised May and June payroll numbers. [28] The July employment report had shown job growth in recent months was substantially lower than had previously been reported. [29]
Source: https://www.wsj.com/personal-finance/mortgages/mortgage-refinancing-starts-to-thaw-as-rates-trend-down-25ad4ae7?mod=Searchresults&pos=1&page=1
With expectations for lower rates on the horizon, the average 30-year fixed mortgage rate dropped to a 10-month low of 6.56%. [30] This rate has inched down for nine of the 12 weeks prior to month end, to the relief of homebuyers and owners looking to refinance. [31] Over two million people may now be able to save money by refinancing, and if rates drop to 6% then nearly six million homeowners would save enough to make refinancing worthwhile. [32]
Looking Ahead
The Federal Reserve is expected to deliver the first interest rate cut of the year at its September 16-17 meeting, which provides a natural focus in the weeks ahead. [33] However, Congress is also back in session and faces an uphill battle to pass a spending bill by the end of the month to avoid a government shutdown [34]
Expect more market chatter and volatility in September. As we settle into the routines of fall, it’s a good time to refocus and take stock of your personal financial situation and reevaluate goals. Long-term investing favors preparation over prediction, and we’re here to keep your strategy anchored to your goals. If you’d like to discuss any questions, revisit objectives, we are ready to help you navigate as we head into year-end.
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Historical data shown represents past performance and does not guarantee comparable future results. The information and statistical data contained herein were obtained from sources believed to be reliable but in no way are guaranteed by JSF Financial, LLC or NewEdge Securities, LLC as to accuracy or completeness. The information provided is not intended to be a complete analysis of every material fact respecting any strategy. The examples presented do not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy. Diversification does not ensure a profit or guarantee against loss. Carefully consider the investment objectives, risks, charges and expenses of the trades referenced in this material before investing.
Asset Allocation and Diversification do not guarantee a profit or protect against a loss.
The Bloomberg Barclays U.S. Aggregate Bond Index measures the investment-grade U.S. dollar-denominated, fixed-rate taxable bond market and includes Treasury securities, government-related and corporate securities, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities.
The S&P 500 Index is an unmanaged, market value-weighted index of 500 stocks generally representative of the broad stock market.
TLT-iShares 20 Plus Year Treasury Bond ETF seeks to track the investment results of an index composed of US Treasury bonds with remaining maturities greater than twenty years.
The CBOE Volatility Index (VIX) is a real-time index that represents the market’s expectations for the relative strength of near-term price changes of the S&P 500 Index (SPX). Because it is derived from the prices of SPX index options with near-term expiration dates, it generates a 30-day forward projection of volatility. Volatility, or how fast prices change, is often seen as a way to gauge market sentiment, and in particular the degree of fear among market participants.
The Nasdaq Composite is a market-capitalization-weighted index consisting of all Nasdaq Stock Exchange listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds or debenture securities.
Treasury Bond- is a U.S. government debt security with a fixed interest rate and maturity between two and 10 years.
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period. GDP is the most commonly used measure of economic activity.
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[1] https://www.reuters.com/markets/wealth/powell-says-fed-may-need-cut-rates-will-proceed-carefully-20…
[2] https://www.reuters.com/business/finance/powell-fires-up-markets-some-investors-see-reason-caution-…
[3] https://www.bloomberg.com/news/articles/2025-08-28/us-stocks-waver-as-wall-street-weighs-nvidia-s-t…
[4] https://www.cnbc.com/2025/08/28/stock-market-today-live-updates-.html
[5] https://www.marketwatch.com/story/equal-weight-s-p-500-sees-longest-winning-streak-since-2021-amid-…
[6] https://www.reuters.com/world/china/global-markets-wrapup-9-graphics-2025-08-01/
[7] https://www.wsj.com/livecoverage/jobs-report-today-stock-market-08-01-2025/card/why-jobs-numbers-we…
[8] https://www.wsj.com/livecoverage/jobs-report-today-stock-market-08-01-2025/card/why-jobs-numbers-we…
[9] https://www.wsj.com/finance/superlong-jgb-yields-lower-after-lackluster-economic-data-b3691099
[10] https://www.wsj.com/finance/superlong-jgb-yields-lower-after-lackluster-economic-data-b3691099
[11] https://www.reuters.com/business/wall-st-week-ahead-us-jobs-data-poses-hurdle-rate-cut-hopes-stocks…
[12] https://www.reuters.com/commentary/breakingviews/us-markets-present-double-concentration-risk-2025-…
[11] https://insight.factset.com/magnificent-7-companies-reported-earnings-growth-above-25-for-q2
[14] https://insight.factset.com/magnificent-7-companies-reported-earnings-growth-above-25-for-q2
[15] https://insight.factset.com/magnificent-7-companies-reported-earnings-growth-above-25-for-q2
[16] https://www.marketwatch.com/story/equal-weight-s-p-500-sees-longest-winning-streak-since-2021-amid-…
[17] https://www.reuters.com/markets/europe/us-small-caps-quietly-notch-historic-outperformance-vs-tech-…
[18] https://www.wsj.com/politics/policy/appeals-court-rejects-trumps-global-tariffs-aae2dc99
[19] https://www.wsj.com/politics/policy/appeals-court-rejects-trumps-global-tariffs-aae2dc99 >
[20] https://www.wsj.com/politics/policy/trump-tariff-case-ups-ante-at-supreme-court-688f9df3
[21] https://www.wsj.com/politics/policy/trumps-september-is-filled-with-tough-deadlines-a128a23e
[22] https://www.wsj.com/politics/policy/appeals-court-rejects-trumps-global-tariffs-aae2dc99
[23] https://www.wsj.com/politics/policy/appeals-court-rejects-trumps-global-tariffs-aae2dc99
[24] https://www.goldmansachs.com/insights/articles/trade-uncertainty-has-a-smaller-impact-on-the-econom…
[25] https://www.morganstanley.com/insights/articles/investing-outlook-second-half-2025
[26] https://www.cnbc.com/2025/08/22/powell-indicates-conditions-may-warrant-interest-rate-cuts-as-fed-p…
[27] https://www.cnbc.com/2025/08/22/powell-indicates-conditions-may-warrant-interest-rate-cuts-as-fed-p…
[28] https://www.cbsnews.com/news/jobs-employment-slowdown-layoffs-federal-reserve-jerome-powell-charts/
[29] https://www.cbsnews.com/news/jobs-employment-slowdown-layoffs-federal-reserve-jerome-powell-charts/
[30] https://www.wsj.com/personal-finance/mortgages/mortgage-refinancing-starts-to-thaw-as-rates-trend-d…
[31] https://www.wsj.com/personal-finance/mortgages/mortgage-refinancing-starts-to-thaw-as-rates-trend-d…
[32] https://www.wsj.com/personal-finance/mortgages/mortgage-refinancing-starts-to-thaw-as-rates-trend-d…
[33] https://www.wsj.com/economy/central-banking/fed-interest-rate-cut-lisa-cook-2f3c7e0f
[34] https://www.wsj.com/politics/policy/trumps-september-is-filled-with-tough-deadlines-a128a23e
