Market Commentary Dog Days Of Summer

Market Commentary – August 7, 2025

As we head into August, the market is showing signs of fatigue. While the S&P 500 remains near record highs, the rally has lost some of its earlier energy

July’s jobs report came in light, with only 73,000 new payrolls added – well below expectations – and perhaps an early sign that the labor market is beginning to cool. Meanwhile, the Federal Reserve (Fed) opted to keep interest rates unchanged last week as expected, but the decision wasn’t unanimous. For the first time since 1993, two FOMC members dissented, voting in favor of a rate cut. The Fed’s current stance remains mildly restrictive, with ongoing balance sheet reduction quietly draining liquidity from the system, which is estimated to be about a 50-basis point tightening. Following the announcement of significant revisions in employment figures for June and May (downward of a combined 258,000 jobs!), along with surprisingly weak numbers for July, President Trump fired the head of the Bureau of Labor Statistics on Friday, and later that day, a member of the Federal Reserve Board resigned. In addition to all this, Trump announced tariffs against over 60 countries, ranging from 10% to 41% – they’re due to take effect on Thursday August 7. Markets responded with a decidedly cautious tone. However, we wouldn’t be surprised to see more volatility during August, a month known as a market peak that leads to a correction during the months of September and October.

Possible Rough Waters When Autumn Arrives

We note that equity markets have some risks near-term. First, while September and October are typically seasonally weak, August and September have averaged declines in the first year after a presidential election, dating back to 1952. Second, we note that downside volume has been rising over the past 3 months. We are cautious about possible market volatility as we approach the autumn months. Nevertheless, we would use any downside as an opportunity to take equity positions. We believe the secular bull market is intact, and that any sell-off should be used to the advantage of long-positioned investors.