Stock Market Update and August Outlook
The U.S. stock market showed resilience in July 2025, with the S&P 500 and Nasdaq reaching record highs despite ongoing trade policy uncertainties. The Dow also trended upward, nearing its first record high of the year. Strong corporate earnings, with 80% of S&P 500 companies beating expectations, and a robust labor market with a 4.1% unemployment rate supported market gains. Technology and consumer cyclical sectors led, with gains of 10.3% and 8.9%, respectively. However, tariff-related concerns introduced volatility, keeping investors cautious.
August 2025 Outlook
Looking ahead to August, markets may experience continued volatility as the August 1 tariff deadline approaches. Progress in trade negotiations with major partners like the EU could stabilize markets, but unresolved deals may pressure equities. Investors should monitor corporate earnings and labor market data for signs of resilience.
Historically, the markets tend to slow down this time of year, and many investors will be watching the Federal Reserve for any signals about future interest rate changes. Earnings season will also continue, and results from retailers and travel companies could provide more clues about how the consumer is holding up. Our team at Prism Capital Management will continue to navigate these uncertainties to optimize your investments.
Impact of U.S. Tariffs on the Stock Market and Economy
U.S. tariffs, rising to an average effective rate of 19.7% by July 2025, have significantly influenced markets and the economy. New tariffs, including 30% on the EU and Mexico, effective August 1, are projected to reduce U.S. GDP growth by 0.9% in 2025, with long-term economic output down by 0.5% ($135 billion annually). The unemployment rate may rise by 0.5%, and payrolls could drop by 641,000 by year-end. While manufacturing output may increase by 2.6%, sectors like construction (-4.1%) and agriculture (-0.8%) face declines. Stock markets have reacted with cautious optimism, expecting trade deals to moderate tariff impacts, but high tariffs could reduce S&P 500 earnings by 2-3% and valuations by 3% if sustained.
Financial Services for Real People
Founded for the benefit of clients, Prism Capital Management is an independent Seattle and Skagit-based firm with a deep commitment to providing guidance that is free of conflicts of interest, based solely on the sum of our experience and expertise. We are committed to putting client interests first and to stewarding both wealth and well-being for those we serve. We have a singular measure of success: the results we get for our clients.
As an Investment Advisor, we have a fiduciary duty to act in YOUR best interest. From planning to investment management to advice on buying a car, we are your financial life partners.
Schedule a FREE Consultation Today!
