The Market Down & Dirty

August 4, 2025                        

The Data

Equities ended the week lower as weak labor market data caused some fresh concerns.

• S&P 500 -2.41% Dow -2.92% Russell 2000 -4.22%, Nasdaq -2.17%.[1]

• The All-Country World Index declined -2.71%.1

S&P 500 sub-sectors were mostly lower last week.

• Utilities were the lone positive sector.1

• Materials led to the downside with a loss of -6%.1

The CBOE Volatility Index (VIX) climbed 36% to end at 20.41.1

US Treasury bond yields were sharply lower last week.

• US 2yr -0.22% at 3.69%, 10yr -0.17% to 4.23%, 30yr -0.11% to 4.81%.1

• Friday saw the short end have its largest one day move lower in yields since 2023.

Commodities as an aggregate asset class were slightly higher last week.

• WTI Crude rose +3.12.1

• Gold was gained +0.72%.1

The US Dollar index shot higher by +1.01%.1

In our opinion, U.S. economic data was mixed week.

• The friday jobs report showed increasing unemployment with far fewer jobs than expected.1

• The PCE price index rose and showed inflation up +2.6% over the last year.1

• Consumer confidence & sentiment both improved slightly in July.1

An index of equities outside the US (FTSE All-World ex-US) sank -3.15%.1

Conclusion

The calm that equity markets had experienced for the past 3 months was shook up last week.

All major indices were lower by at least 2.1% while the small cap tracking Russell 2000 declined over 4%.1

• Much of the drop came on Friday following a much worse than expected job market report that showed less jobs created than expected, an increasing unemployment rate, & massive downward adjustments to the last two months’ reports.

• Geopolitical tensions added to the risk off tone in the markets last week between tariff headlines and the Trump administration moving nuclear submarines near Russia.

  
  

S&P 500 sub-sectors followed the broad markets lower last week.

• Utilities gained on the back of a sharp decline in bond yields.

• All eyes remain on the Tech sector as it has driven most of the overall index returns.

Interest rates were sharply lower across the maturity curve last week.

• Treasury yields sank on Friday as a surprisingly weak US payroll report unleashed a frenzy of buying following a month of bond losses.

• The data, including downward revisions that trimmed a whopping 258,000 jobs from the tallies in May and June, sent traders piling into fresh wagers on Federal Reserve interest-rate cuts, with futures pricing in 84% odds of a reduction next month and at least two cuts by year-end. 1

The shock factor of the data extended the rally across all maturities, but the major move was in the short end which most closely tracks expected Fed policy.

• The 2-year yield slid by more than a quarter point for their biggest one-day decline since December 2023. 1

The Federal Reserve held rates steady this week, as expected.

• Interesting to note that there were 2 voting members who dissented, calling for a quarter of a point cut. 1

• In his news conference, Chairman Jerome Powell continued the message of being patient and waiting on the data as economic data remains solid and inflation is running slightly hotter than the central bank would prefer.

Non-US equities were lower last week.

• The US Dollar ended the week slightly higher following a large sell-off on Friday.1

• Despite negative headlines, recent data shows a strong rebound in foreign demand for US assets…both equities and bonds.

Commodities as an asset class were slightly higher last week.

• Oil gained despite the big drop on Friday and OPEC+ agreeing to additional production.1

• Copper dropped 23% on the week1, highlighting the amount of speculation going on in the commodities market.

• Gold gained slightly and remains rangebound near critical levels.

Justin Greenhill - Chief Investment Officer – justin@sollinda.com 

Ryan A. Mumy, CFP®, AIF® - CEO – ryan@sollinda.com   

Phone:  828-855-9400

[1] Source: Bloomberg – 7/25/2025