July 2025 Market Update
Fed Holds Line, Inflation & Tariffs, Consumer Fatigue
I hope you’re doing well. June saw markets improve as the inflation narrative shifted and trade policy zigged and zagged. Confronted with such a challenging assortment of factors, the Federal Reserve is remaining cautious.
Read on for key highlights from last month.
Major U.S. Stock Indexes
U.S. stocks hit new highs last month as the financial markets returned to a risk-on stance. Both the S&P 500 and Nasdaq 100 finished June in record territory.
- The S&P 500 rose 4.96%.
- The Nasdaq 100 increased 6.27%. T
- he Dow Jones Industrial Average climbed 4.32%.
Federal Reserve Stays the Course
Financial markets are betting the “patient” faction led by Federal Reserve Chair Jerome Powell will maintain its hold, with traders pricing in just a 23% chance of a July rate cut. Powell told Congress last week that “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” What could accelerate rate cuts? Deterioration in the economic outlook, particularly weakness in the labor market.
While the unemployment rate remains low at 4.2%, leading indicators of job growth are pointing to a cooling labor market, with continued jobless claims now at their highest level since November 2021. Inflation and Tariffs Prices in the U.S. rose 2.3% in May compared with a year ago, up from just 2.1% in April. Excluding the volatile food and energy categories, core prices rose 2.7% from a year earlier, an increase from 2.5% the previous month.
Most people expect inflation to rise soon due to tariffs, since the added costs will end up paid by someone along the supply chain — whether it’s manufacturers, retailers, or consumers — according to Fed Chair Powell. Indeed, early indications show the inflationary impact of tariffs: Walmart in May reported that its customers will start to see higher prices in June and July with back-to-school shopping, and Nike expects U.S. tariffs will cost the company $1 billion this year, saying it will institute “surgical” price increases in the fall.
Are Consumers Tiring?
Factors indicating consumer fatigue include falling gas sales, declining auto purchases after a tariff-fueled buying rush earlier in the year, and broader unease over the economic outlook. Excluding autos, sales fell 0.3%, though retail sales rose 0.4% without the most volatile categories.
The University of Michigan’s consumer sentiment index, released on June 27, rebounded from its near two-year low in May, marking the first increase in six months. However, the survey continued to reflect expectations of rising inflation and an impending economic slowdown. The data follows the June 26 revisions to U.S. GDP estimates, which reduced first-quarter consumer spending growth from a 1.2% increase to a mere 0.5%.
Job Pressures Impact Confidence
The number of Americans receiving ongoing unemployment benefits has risen to its highest level in three and a half years, signaling a softening labor market. Both current job availability and hiring conditions have weakened. The Conference Board Consumer Confidence Index fell by 5.4 points in June to 93.0. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — fell 6.4 points to 129.1.
The Conference Board surveys focus on the labor market and job security from the worker’s perspective. Despite consumers’ declining view about business conditions for the sixth straight month, with a less favorable take on job availability, spirits for the labor market were still moderately upbeat.
Looking Ahead
The market’s rebound from April lows and recent global events is encouraging, but significant uncertainties remain. Most notable is the potential impact of the Middle East conflict on oil supplies from the Gulf, which holds half of global reserves and a third of production. Amid tariff uncertainties and market volatility, it’s crucial to stay focused on your long-term goals. Investing success comes from thoughtful strategy, as opposed to market timing. Volatility is part of the process, and markets often – but not always – price in future risks well before they materialize.
If you’d like to discuss the current outlook or review your strategy based on recent developments, please reach out. I’m always here to support you.
Financial Advisor
HH Financial Planning Group
HH Financial Planning Group 120 South Iowa Street 5950 Seminole Centre Ct., Ste. 150 Dodgeville, WI 53533 Fitchburg, WI 53711 (608) 935-7800 harry@hhfinancialplanning.com www.hhfinancialplanning.com Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer member FINRA/SIPC. HH Financial Planning Group and Cambridge are separate entities. CONFIDENTIALITY NOTICE: This message is intended for the use of the individual or entity to whom it is addressed. The information in this message is confidential. Access to this message by anyone else is unauthorized. If you are not the intended recipient, any disclosure, copying, distribution or any action taken, or omitted to be taken in reliance on it is prohibited and may be unlawful. If you have received this communication or message in error, please notify us immediately. Content was prepared by Levitate. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results. We cannot accept trade orders through email. Important letters, email, or fax messages should be confirmed by calling (608) 935-7800 or (844) 544-1374. This email service may not be monitored every day or after normal business hours. The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. Citations: Associated Press. (2025, June 18). Inflation and consumer spending rise. https://apnews.com/article/inflation-economy-spending-a79d36a04c4ce1e264bc86098e4f5583 Associated Press. (2025, June 20). Interest rates, Federal Reserve, Trump and inflation. https://apnews.com/article/interest-rates-federal-reserve-trump-inflation-df5b9ac09f0cd283797c6c294a98da9c Cox, J. (2025, June 17). Retail sales fell in May, excluding autos. CNBC. https://www.cnbc.com/2025/06/17/retail-sales-may-2025-.html Financial Modeling Prep. (2025, June). July rate cut in focus as Fed signals shift amid Trump pressure. Retrieved from https://site.financialmodelingprep.com/market-news/july-rate-cut-in-focus-as-fed-signals-shift-amid-trump-pressure Franck, T. (2025, June 27). More sticker prices start to go up due to tariffs. CNBC. https://www.cnbc.com/2025/06/27/deep-inside-economy-more-sticker-prices-start-to-go-up-due-to-tariffs.html Reuters. (2025, June 12). U.S. weekly jobless claims steady at higher levels. https://www.reuters.com/world/us/us-weekly-jobless-claims-steady-higher-levels-2025-06-12/ Reuters. (2025, June 18). Fed’s Powell says he expects to see more tariff-driven price hikes in coming months. https://www.reuters.com/business/feds-powell-says-he-expects-see-more-tariff-driven-price-hikes-coming-months-2025-06-18/ Reuters. (2025, June 26). U.S. first-quarter GDP revised lower amid tepid consumer spending. https://www.reuters.com/world/us/us-first-quarter-gdp-revised-lower-tepid-consumer-spending-2025-06-26/ The Conference Board. (2025, June). Consumer Confidence Index — June 2025. https://www.conference-board.org/topics/consumer-confidence/press/CCI-Jun-2025 TradingView. (n.d.). Dow Jones Industrial Average chart. Retrieved July 1, 2025, from https://www.tradingview.com/chart/?symbol=DJ%3ADJI TradingView. (n.d.). NASDAQ 100 Index chart. Retrieved July 1, 2025, from https://www.tradingview.com/chart/?symbol=NASDAQ_DLY%3ANDX TradingView. (n.d.). S&P 500 Index chart. Retrieved July 1, 2025, from https://www.tradingview.com/chart/?symbol=CBOE_DLY%3ASPX University of Michigan. (n.d.). Surveys of Consumers. Retrieved July 1, 2025, from https://www.sca.isr.umich.edu/ U.S. Bureau of Labor Statistics. (2025, May 2). The employment situation — April 2025 [News release]. https://www.bls.gov/news.release/archives/empsit_05022025.htm