July 2025 Market Recap: Resilience Amid Trade Shifts and Tech Wins

Welcome to the July 2025 Market Recap from Nexus Wealth Management, your trusted Missoula financial advisory team. As we navigate the evolving financial landscape, this month brought a mix of resilience and challenges for investors. Let’s break down the key highlights, from U.S. equity gains to global trends, and offer insights to guide your wealth management journey.

Performance Snapshot: U.S. Indices Shine with a Tech Boost

July 2025 saw U.S. stocks post moderate gains, reflecting economic strength despite uncertainties. The S&P 500 climbed 2.2%, closing at 6,339, driven by broad market resilience. The Dow Jones Industrial Average edged up 0.1% to 44,131, supported by blue-chip stability but tempered by trade-sensitive sectors. Meanwhile, the Nasdaq Composite surged 3.7% to 21,122, propelled by a tech sector rally, with over 82% of S&P 500 companies beating earnings estimates—around 271 firms—highlighting robust corporate performance, especially in AI and innovation.

What Helped the Market

Several factors fueled this upward momentum. Strong corporate earnings, particularly from tech giants dubbed the "Magnificent Seven," exceeded expectations with impressive revenue growth from AI advancements and consumer demand, pushing the tech sector up over 5% and significantly lifting the Nasdaq. Trade progress under the Trump administration’s "One Big Beautiful Bill" brought new reciprocal tariffs and agreements with Japan, the UK, and the EU, reducing some global trade uncertainties and boosting investor confidence, even as tariffs averaged 18%. The Federal Reserve’s decision to hold rates steady at 4.25%-4.5%, emphasizing a balanced approach to inflation and growth, provided a stabilizing force, calming fears of abrupt policy shifts and supporting equity valuations. Additionally, the fragile ceasefire following June’s Middle East escalations shifted focus back to domestic strengths, easing oil supply concerns and aiding market recovery from mid-month dips.

What Hurt the Market

However, challenges persisted. Lingering tariff policy concerns introduced volatility, as higher rates threatened to increase costs for businesses and consumers, pressuring trade-exposed sectors like industrials and materials, which saw declines around 1%. Softer labor market data added pressure, with nonfarm payrolls adding fewer jobs than expected and unemployment ticking up by 0.1 percentage points to 4.2%, signaling potential economic slowdowns and prompting investors to reassess growth prospects amid ongoing policy flux. Inflation uncertainty persisted, with June's CPI at 2.7% year-over-year—up from 2.4% and above forecasts—driven by tariff impacts, raising fears of delayed Fed rate cuts and eroding corporate margins. Residual geopolitical and policy risks, including the risk of renewed Middle East tensions and broader trade frictions, added caution, limiting fuller market participation and contributing to elevated VIX levels around 20.

International Equities: Modest Global Gains with Regional Variations

Global markets advanced steadily, with the MSCI World Index up 1.3% to around 4,059. In Europe, the FTSE 100 climbed 4.2% on financial sector momentum, while the Euro Stoxx 50 rose 0.3% amid fiscal debates. Asia performed well, with the Nikkei 225 surging over 2% due to yen strength and reforms, and the Shanghai Composite gaining 2.3% on stimulus measures. Emerging markets outperformed at 2.0% via the MSCI Emerging Markets Index, led by Asia's resilience. What helped? Attractive valuations relative to the U.S., trade policy developments reducing uncertainties, regional fiscal stimulus like Germany's infrastructure push, and strong earnings in tech and financials. What hurt? Tariff uncertainties affecting exporters, persistent geopolitical risks from conflicts like Russia-Ukraine, slower growth in key economies, and a stronger U.S. dollar pressuring returns for U.S.-based investors.

Bonds: Stability Amid Yield Fluctuations

Fixed income offered a counterbalance, with the 10-Year U.S. Treasury yield ending at 4.37%, up from 4.22%, reflecting inflation concerns. The Bloomberg U.S. Aggregate Bond Index gained 1.5%, supported by coupon income. Government bonds drew safe-haven flows, while corporate bonds trended positive with tightening investment-grade spreads and high-yield outperformance on low defaults. What helped? The Fed's steady stance, attractive yields for income generation, strong corporate demand, and geopolitical uncertainties boosting Treasuries. What hurt? Rising yields from sticky inflation, tariff-driven volatility, selective spread widening in trade-sensitive sectors, and policy risks causing temporary sell-offs.

Inflation Trends: Sticky Pressures Persist

The June CPI rose 2.7% year-over-year, accelerating from May's 2.4% and slightly exceeding expectations, largely due to tariff-related import costs and services inflation. Core CPI hit 2.9%, implying challenges for the economy, such as delayed rate cuts and strained consumer spending. This trend dampened sentiment but reinforced the need for vigilant portfolio management.

Key Takeaways for Investors

July's developments highlight a balanced yet cautious market: resilient growth amid risks like tariffs and geopolitics. Prioritize diversification to hedge U.S.-centric issues, capitalize on tech opportunities, and use bonds for stability. Maintain a long-term view—markets recover—and focus on fundamentals like budget reviews and debt reduction. For August, watch Fed updates, earnings, and conflict risks.

At Nexus Wealth Management, our Missoula-based team is here to tailor these insights to your goals, from 401k benchmarking to tax mitigation and inheritance planning. Contact us for a personalized consultation.

Stay invested and informed!

Robert@NexusWealthManagement.org