DFG Navigator Archives | August 2025

Your Capital Markets Snapshot: Markets Reacted Positively Following News of a Potential Fed Pivot

Last week, markets reacted positively following the Federal Reserve’s annual Jackson Hole symposium, where Chair Jerome Powell signaled a change in monetary policy may be necessary. Markets reacted with rising expectations of a rate cut at the September meeting. This dovish tone sparked a strong Friday rally, lifting the S&P 500 to a modest weekly gain despite sliding for five consecutive days prior. Under the surface, market leadership rotated from mega-cap tech stocks to cyclical and value sectors. Bond yields fell across the curve as expectations for a September rate cut climbed to nearly 90%, and futures markets priced in two cuts this year. Economic data was mixed: PMI readings surprised to the upside, while jobless claims ticked higher. Retail earnings from Walmart, Target, and Lowe’s highlighted resilient consumer spending despite tariff-related cost pressures. Overall, markets appear optimistic, supported by a potential Fed pivot and broadening equity participation, though volatility risks remain as inflation and labor trends evolve.

Your Capital Markets Snapshot: Markets Responded to a Mix of Data, Results, and Geopolitical Developments

Last week, markets responded to a mix of inflation data, earnings results, and geopolitical developments. The Consumer Price Index (CPI) rose 0.2% month-over-month, in line with expectations, while core CPI climbed to 3.1%, the highest since February, driven by rising service costs. However, the Producer Price Index (PPI) surprised to the upside, increasing 0.9%, raising concerns about future consumer price pressures. Despite this, equity markets remained resilient, with the S&P 500 and Nasdaq gaining around 1% and the Dow Jones 1.8% over the week. Small-cap and value stocks outperformed their large-cap and growth peers, possibly signaling a broadening of market leadership as expectations for a September Fed rate cut continue to increase. Earnings season continued to support bullish sentiment, especially in the tech sector, where mega-cap stocks drove much of the growth. Tariff developments also made headlines, with new levies on semiconductors. Overall, markets showed strength but remain sensitive to inflation trends and central bank signals.

Your Capital Markets Snapshot: US Equities Rebounded Strongly

Last week, US equities rebounded strongly, led by technology and consumer discretionary stocks, with the S&P 500 gaining over 2% and the NASDAQ hitting a new record high. Corporate earnings continued to deliver upside surprises, especially among AI- related firms. Overall, reported EPS growth for Q2 climbed to 11.4%. Treasuries experienced slightly weaker demand at auctions. Yields experienced a modest steepening as short-term rates continue to tick lower while long-term rates higher. Renewed expectations of an impending rate cut appear to be part of the causes of falling short-term yields. Uncertainty on US monetary, trade, and taxation policies are contributing to rising long-term rates. The services sector, which accounts for around 70% of US GDP, showed mixed signals but still appears to be signaling the sector is expanding, albeit at a slowing rate. Tariffs increased from the April 10% baseline for more than 90 countries, including a new 100% rate on semiconductors, though exemptions softened the impact. Tariffs vary widely from 10% to 50%, but most countries are facing rates within the 10% - 20% range.

Your Capital Markets Snapshot: Markets Continued Upward Trajectory

Markets continued their upward trajectory, as the S&P 500 and Nasdaq continue climbing to new all-time highs. Markets have been buoyed by strong Q2 earnings, new trade deals, and resilient economic data. This upcoming week is loadedwith earnings and economic releases, which introduces the potential for increased short-term volatility on the back of any surprises. Thus far Q2 is off to a strong start for earnings releases. With just under half of the S&P 500 companies reporting this week, we will get more clarity on the strength of earnings growth and potential impacts of US tariff policy on future growth prospects. A recent string of trade deals has led to decreasing uncertainty around US trade policy and created a template for future negotiations. While geopolitical tensions remain elevated in parts of the world, equity markets have showed resilience, supported by solid fundamentals and corporate performance. As valuations are high relative to history, a strong earnings season is important to support the recent growth trend.

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