Monthly Market Insights | August 2025

U.S. Markets

Stocks rode the wave of trade developments and Q2 corporate results to advance last month, pushing market averages to multiple record highs.

The Standard & Poor’s 500 Index gained 2.17 percent, while the Nasdaq Composite rose 3.70 percent. The Dow Jones Industrial Average edged 0.08 percent higher.1

You can’t go back and change the beginning, but you can start where you are and change the ending. C.S. Lewis, British scholar and novelist

All About Tariffs

Early in the month, a better-than-expected June jobs report from the Bureau of Labor Statistics gave stocks another boost, reassuring investors that the U.S. economy was weathering trade and geopolitical shocks.2

However, sellers gained the upper hand after the White House sent letters to dozens of countries announcing new tariffs, which were set to take effect on August 1. Stocks came under pressure after the White House announced tariffs on seven additional countries. But the markets gradually recovered, hoping the administration would dial back its steepest tariff rates. The S&P 500 and Nasdaq rose to fresh records.3,4

Upbeat Outlook

Stocks rose steadily over the second half of the month as investors viewed trade developments, economic updates, and Q2 corporate results in a positive light. Optimism around the Q2 corporate reporting season gave way to mostly positive market reactions as the actual reports began to roll in.5

Trade in the News

Trade negotiations took center stage again after the White House announced an agreement with Japan. The Nasdaq closed above 21,000 for the first time, while the S&P hit its 12th record close this year.6

Busy Economic Week

In the final four trading sessions of the month, stocks mostly went sideways, as investors digested a lot of economic news.6

Investors largely yawned at the news of the trade agreement between the U.S. and the E.U. Traders seemed a bit more concerned that China stalled slightly. Stocks gained after the gross domestic product report showed consumer spending powered the economy to 3 percent growth in Q2, but dipped after the Fed held rates steady.7,8

Sector Scorecard

Five of the 11 S&P 500 Index sectors finished higher for the month.9

Utilities (+4.91 percent), Technology (+3.76 percent), Industrials (+3.04 percent), Energy (+2.83 percent), and Consumer Discretionary (+1.89 percent) were the leaders.9

On the downside, Healthcare (-3.23 percent), one of the largest groups in the S&P 500, came under pressure. Consumer Staples (-1.47 percent) and Communication Services (-1.03 percent) also posted losses. The remaining sectors—Materials (-0.09 percent), Real Estate (-0.02 percent), and Financials (+0.00 percent)—were essentially flat.9

What Investors May Be Talking About in August

While there is no Fed meeting in August, investors will hear plenty from Fed officials during the month.

The Fed will release the minutes of its July meeting on August 20, which may provide some clues about policy direction.

And on August 21, the Fed kicks off its Economic Policy Symposium in Jackson Hole, Wyoming. This year’s theme is “Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.” Fed Chair Powell will speak, which means investors can hear what might be next for monetary policy.10

World Markets

The MSCI EAFE Index fell 1.45 percent in July, trailing all three major U.S. averages.11

European markets were higher. Spain (+2.90 percent), France (+1.38 percent), and the U.K. (+3.22 percent) were among the best performers.11

Markets outside Europe were also mixed. Egypt (+4.56 percent) and Korea (+5.66 percent) were the leaders.11

Pacific Rim market performance was also mixed. Hong Kong (+2.91 percent) was the standout, followed by Japan (+1.44 percent). Australia also had a solid month, picking up 2.35 percent.11

Indicators

Gross Domestic Product (GDP)

The first GDP estimate for the second quarter showed that the economy grew at an annualized 3.0 percent rate in the second quarter. Second-quarter growth was driven by increased consumer spending but was offset by slower business spending, especially investment in equipment and buildings.12

Employment

Employers added 147,000 jobs in June, higher than the 110,000 economists had expected. Unemployment inched down to 4.1 percent after three consecutive months at 4.2 percent. Annualized hourly wage growth rose 3.8 percent in June from May’s downwardly revised 3.8 percent growth.13

Retail Sales

Consumer spending rose 0.6 percent in June over the prior month, beating expectations of a 0.1 percent rise and rebounding from May’s 0.9 percent decline. The broad-based gains were driven by a drop in consumer concerns about the economy and improved consumer sentiment.14

Industrial Production

Industrial output rose 0.7 percent year over year in June. Manufacturing and mining gained, while the output for utilities decreased.15

Housing

Housing starts increased 4.6 percent in June over the prior month, driven mostly by a 30.6 percent rebound in multifamily construction that offset the 4.6 percent month-over-month decline in single-family starts. Geographically, the Northeast drove all the gains, where multifamily housing is the most concentrated. Steadily rising inventory has pulled down home prices and is increasingly prompting builders to put the brakes on new projects.16

Sales of existing homes fell 2.7 percent in June over the prior month. High mortgage rates and high home prices were blamed for the decline. The median existing home sales price was $435,300, a record high for June and 2 percent higher than a year ago.17

New home sales rose 0.6 percent in June over the prior month. The South and Midwest led regional gains, while the Northeast and West declined. The median new home sales price fell to $401,800 in June compared with a year ago. There were 511,000 unsold new homes on the market in June, equal to 9.8 months of supply at the latest pace of sales.18

Consumer Price Index (CPI)

As expected, consumer prices rose 0.3 percent in June over the prior month. Year over year, prices rose 2.7 percent, which aligned with expectations. Core inflation, which excludes volatile food and energy prices, rose 0.2 percent month over month and 2.9 percent year over year.19

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer declined 9.3 percent in June after surging 16.5 percent in May.20

The Fed

The Federal Open Market Committee (FOMC) held rates steady at its July meeting—a widely expected decision. This was the fifth consecutive meeting at which the FOMC has kept the fed funds rate in the current 4.25 to 4.5 percent target range. However, two of the 12 voting members of the committee dissented—a rare occurrence—both backing a quarter-percentage-point rate cut.21

Fed Chair Powell continues to assert that more time is needed to better understand the full impacts of trade policy on inflation.21

The FOMC’s next meeting is scheduled for September 16-17.

By the Numbers: Back-to-School