August 7, 2025

Written by: Ryan Smith, Associate Portfolio Manager, with contributions from Ryan Kelly, CFA®, Chief Investment Officer

Stock Market

Equities continued their rally in July, with the S&P 500 and Nasdaq up 2.24% and 2.41%, respectively.  Much of this performance can be attributed to strong company earnings. According to FactSet, as of July 25th, 34% of S&P companies reported earnings for Q2 and 80% of them were better than expected. From the trough of the market pullback in April, the S&P is up 28% and the Nasdaq is up over 36%. International equities were positive during July, notably the FTSE 100 (United Kingdom) which returned 4.31%.

Bond Market

Following a gain of 1.54% in June, bonds declined 0.2% (as measured by the Bloomberg US Aggregate Bond Index) in July. Treasury yields across the curve rose during July, with the 2-year rising 0.24% and the 10-year rising 0.15% amid inflation fears from tariffs, hiking bets that the Federal Reserve remains patient to cut interest rates. Following the July jobs report on Friday 8/1, however, Treasury prices rose greatly with short-term yields dropping to 12-month lows, with the 2-year treasury falling 0.25% to 3.71%.

Employment

The US added 73,000 jobs in July, much less than the 104,000 expected. Jobs gains/losses occurred in health care (+55,000), social assistance (+18,000), and the federal government (-12,000). Additionally, the unemployment rate moved up to 4.2% from 4.1%, which was in line with expectations and unchanged from a year ago. To pair with this, downward revisions in non-farm payrolls in prior months were “larger than normal” per the Bureau of Labor Statistics (BLS). Following this news, probabilities for a September rate cut by the Fed more than doubled (82.8% chance as of August 4th).

The Federal Reserve

The Federal Open Market Committee (FOMC) met on July 30th and decided to maintain the current federal funds rate range at 4.25%-4.50%. In Chair Powell’s opening statement, he restated the “elevated uncertainty” surrounding economic conditions and their impacts on employment and prices. He also commented on the strength of the US labor market and low unemployment rate. He did mention, however, that inflation is somewhat elevated and above their 2% long-term goal. The June Consumer Price Index (CPI) rose 0.3%, which was in line with estimates, and 2.7% over the past 12-months. Core CPI, which strips out volatile food and energy prices, increased 0.2% over the month, which equates to an annual rate of 2.9%. The July CPI report is scheduled to be released on August 12th.

Economic Growth

Gross Domestic Product (GDP) is a widely used measure of economic activity in the US. It is defined as the value of final goods and services produced in the US in a specified timeframe, typically measured each quarter. In Q2 of 2025, real GDP (i.e., adjusted for inflation) increased 3% at an annual rate, following a 0.5% decrease in Q1 2025. The quarterly advance was driven by a decrease in imports and an increase in consumer spending. The mathematical relationship between these factors is listed below:

GDP = C + I + G +(X-M)

Where:

C = consumer spending (i.e. consumption)

I = investment spending

G = government spending

X-M = net exports (exports – imports)

Sources:

https://insight.factset.com/sp-500-earnings-season-update-july-25-2025

https://www.bls.gov/news.release/empsit.nr0.htm

https://www.bls.gov/news.release/cpi.nr0.htm

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

https://www.federalreserve.gov/newsevents.htm

https://www.bea.gov/data/personal-consumption-expenditures-price-index

https://www.bea.gov/news/2025/gross-domestic-product-2nd-quarter-2025-advance-estimate

Past performance is not indicative of future results. The material above has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed, and LFG Wealth Partners, LLC , makes no representation or warranty as to the accuracy or completeness of the information, which should not be used as the basis of any investment decision. Information contained on third-party websites that LFG Wealth Partners, LLC  may link to are not reviewed in their entirety for accuracy and LFG Wealth Partners, LLC  assumes no liability for the information contained on these websites. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from LFG Wealth Partners, LLC. For more information about LFG Wealth Partners, LLC , including our Form ADV brochures, please visit https://adviserinfo.sec.gov and search for our firm name.

S&P 500 – Considered the most widely accepted benchmark for US large cap equities, the S&P 500 index includes 500 notable companies listed in the US and captures approximately 80% of the total publicly traded US stock market capitalization.

Nasdaq – A broad-based stock index comprised of US companies listed on the Nasdaq exchange. Since it opened 1971, a larger percentage of technology stocks have decided to list on the Nasdaq, rather than the NYSE. While the S&P 500 is currently over 34% information technology stocks, the Nasdaq is currently over 62%, which is why many investors use it as a gauge of US tech stock performance.

FTSE 100 – The Financial Times Stock Exchange 100 Index is a capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange.