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What moved markets in July
- The S&P 500 set ten new all-time highs, including six straight record closes in late July, putting year-to-date gains at 7.8 percent.
- Earnings season delivered positive surprises, with 80 percent of reporting S&P 500 companies beating EPS estimates and blended earnings growth of 6.4 percent year over year.
- A late-month tariff announcement and a weaker jobs trend tempered enthusiasm into month-end.
Quick market scoreboard
| Asset/Index | July Change | Year to Date |
|---|---|---|
| S&P 500 | +2.2% | +7.8% |
| Dow Jones Industrial Average | +0.1% | +3.7% |
| Nasdaq Composite | +3.7% | +9.4% |
| Bloomberg U.S. Aggregate Bond Index | -0.3% | — |
| 10-year U.S. Treasury yield (month-end) | 4.38% | — |
Figures reflect July 2025 results cited in the PDF.
Earnings, AI, and sector trends
Strong earnings and AI investment headlines helped lift several mega-cap names. Microsoft joined NVIDIA above the 4 trillion dollar market cap milestone, while Tesla lagged after weaker results. For 2025 year to date, Information Technology was up over 13 percent, second to Industrials at over 15 percent, while Health Care and Consumer Discretionary trailed.
Rates, the Fed, and bonds
Bonds dipped slightly in July as the Fed held its policy rate at 4.25 percent to 4.50 percent for a fifth meeting. Notably, two governors dissented in favor of a 0.25 percent cut – the first such split since 1993. Softer labor data could keep future rate cuts on the table.
Jobs and inflation check
The economy added 73,000 jobs in July, and prior months were revised down by a combined 258,000. The unemployment rate held at 4.2 percent, and June CPI rose 2.7 percent year over year – roughly in line with expectations.
Trade policy and tariffs
The White House announced multiple trade deals in July and issued an executive order on July 31 adjusting tariff rates for several partners, effective August 7. As of July 23, the Yale Budget Lab estimated an effective overall consumer tariff rate of 20.2 percent – the highest since 1911 – though companies have absorbed much of the cost so far.
Policy: taxes and crypto
Congress advanced crypto rules, and the GENIUS Act – focused on stablecoins – became law. On July 4, a tax-and-spending bill made several Tax Cuts and Jobs Act provisions permanent, reducing policy uncertainty but raising questions about long-term debt sustainability. The Congressional Budget Office projects the bill could add more than 3 trillion dollars to the national debt over the next decade.
Other notable moves
- U.S. dollar index rebounded from 96.88 to 99.97 during July.
- Bitcoin hit a mid-month record near 120,198 dollars before ending around 116,491.
- Gold remained firm near 3,293 dollars per ounce, below its recent peak.
- Copper spiked on tariff dynamics, then saw a single-day 22 percent drop.
Bottom line
Markets advanced to fresh highs despite policy noise. As August begins, earnings and trade developments remain front and center. A steady, diversified plan aligned to your goals beats reacting to short-term headlines.
Key takeaways
- U.S. stocks set ten new all-time highs in July on solid earnings breadth.
- Jobs growth slowed, and prior months’ revisions weakened the trend.
- The Fed held rates; a minority favored a cut, keeping policy flexible.
- New tariff rates were announced, with an effective rate estimated at 20.2 percent.
- Tax changes made permanent may support planning but add to long-term debt.
FAQs
What drove July’s stock gains?
Mostly earnings surprises and optimism around AI-related capital spending, alongside resilient economic data.
How do tariffs affect portfolios?
Tariffs can raise costs and pressure margins. Thus far, many firms have absorbed costs, but sector impacts vary. Diversification helps reduce single-policy risk.
Does the weaker jobs trend change the rate outlook?
Softer payrolls increase the odds of cuts if weakness persists while inflation cools. The Fed remains data dependent.
Are AI leaders the only growth story?
No. Industrials led year to date, and leadership can rotate quickly. Avoid chasing winners without a plan.
What should I do now?
Review allocation, rebalance as needed, and align withdrawals and cash needs to a one-to-two-year liquidity reserve. Consider tax-aware positioning. [General guidance]
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Disclosure
This material is for informational purposes only and is not intended as investment, tax, or legal advice. Investing involves risk, including possible loss of principal. Consult a qualified professional regarding your personal circumstances.