Rockport Market Update – August 2025
Key Takeaways
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GDP bounces back from negative print at the end of Q1
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Fed does not cut rates in July; September cuts likely
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Jobs market is showing signs of weakness, with significant downward revisions to the May and June employment figures
Market Review – July 2025
The stock market delivered another strong performance in July. The S&P 500, including dividends, gained 2.36% for the month, bringing its total return for the year to 8.59%.
Once again, the NASDAQ led the way with an impressive 4.57% return in July, as large-cap tech companies continued to rebound from the pullback seen in March and April.
However, not all segments of the market shared in the gains. The S&P 500 Equal Weight Index slipped slightly by 0.13% for the month. This continues the recent trend of the largest companies driving the majority of the returns in the traditional, market-cap-weighted S&P 500 index.
Despite ongoing headlines around tariffs– still one of the most talked-about topics in 2025– the market has remained resilient. While the full economic impact of these policies may take time to materialize, investor sentiment appears largely unfazed for now.
GDP Confirms Continued Growth
Gross Domestic Product (GDP) grew at an annualized rate of 3.0% in the second quarter, a solid indicator that the economy remains on stable footing. We’ve been closely watching this report, especially following the negative reading in the first quarter, as it helps confirm that the U.S. has avoided a technical recession.
We will continue to monitor GDP data each quarter and keep you updated as new reports are released.
Source: Bureau of Economic Analysis
Federal Reserve Update
As expected, the Federal Reserve held interest rates steady in July. With no FOMC (Federal Open Market Committee) meeting scheduled in August, the next opportunity for a rate decision will come in September.
Currently, markets are pricing in a 92% probability of a rate cut at that meeting. However, it’s important to remember that these projections can shift quickly as new data emerges. For now, we’ll continue to focus on the current economic landscape and adjust as needed once concrete information becomes available.
Employment Trends Worth Watching
Getting a clear picture of the current job market has become more challenging. Recent revisions to the May and June employment reports revealed that significantly fewer jobs were created than initially reported. These downward revisions are noteworthy.
Historically, declines in employment often precede broader economic slowdowns and can influence the Federal Reserve’s decisions on interest rates. For this reason, upcoming job reports will be especially important to watch. A weakening labor market typically increases the likelihood of the Fed moving toward rate cuts.
To help illustrate the scale of the recent changes, we’ve included an excerpt below from the Bureau of Labor Statistics highlighting the revisions.
Direct from the BLS:
Revisions for May and June were larger than normal. The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000 and the change for June was revised down by 133,000, from +147,000 to +14,000. With these revisions, employment in May and June combined is 258,000 lower than previously reported.
Overall, the markets are not in a bad place right now as inflation is still fairly tame and economic growth is good but not great. Seasonality is in play for the next two months as August and September historically have been two of the lower performing months. This has played out in the last several years as we have experienced modest declines. It would not shock us to see some type of pullback once again but these things are nearly impossible to predict.
Information as of 8.12.25
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*Charts produced at yCharts.com
*GDP Estimate – Bureau of Economic Analysis
*CME FedWatch Tool – CME Group
* Rockport Models – Please remember we are referencing our model portfolios, and your portfolio may differ from the models mentioned depending on your individual needs and circumstances.
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