Weekly Market Commentary - August 4, 2025opy

Week In Review

Despite exceptional earnings reports by technology bellwethers Microsoft and Meta and a first look at GDP data that has the economy growing at a surprisingly good 3.0% annual rate in the second quarter, the S&P 500 backtracked for four consecutive days as hawkish monetary policy, fluid economic

headwinds, and fresh tariff rates tormented market sentiment. Federal Reserve Chairman Jerome Powell maintained interest rates at current levels, reiterating his desire to gain a better understanding of the potential impact of tariffs on inflation. The rationale for a “wait-and-see” approach may have run its course though, as subsequent economic reports pointed to persistent inflation but a much less sturdy labor market. The core PCE Price Index, the Fed’s preferred inflation barometer that removes volatile food and energy prices, rose to 2.8% year-over-year and appeared to vindicate the rate standstill. However, the release of the labor market report on Friday may have been a decisive moment for investors. Nonfarm payrolls grew by just 73,000 in July, well below expectations.

Perhaps more shocking were the notable downward revisions to payrolls for the previous two months. May’s estimate was decreased by 125,000 while June was cut by 133,000, putting average job growth at just 35,000 for the last three months.3 The unemployment rate also ticked up to 4.2%. The White House revealed new levies the same day, placing the effective tariff rate at 18.3%, the highest since 1934.4 The S&P 500 tumbled -2.4%.

This Week

So far, so good. Two-thirds of the S&P 500 companies have reported Q2 profits and 82% routed estimates. The earnings season resumes with 122 S&P 500 companies reporting results, including AMD, Pfizer and Disney. 5

Portfolio Theme

Using a yield-per-unit-of-duration metric, 1–3-year U.S. corporate bonds appear to have the highest yield with the lowest price volatility. Simplicity can offer bespoke bond portfolios that may exploit current yield benefits.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from State Street Investment Management.

1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.

3 U.S. BLS.

4 The Budget Lab at Yale University.

5 FactSet.

Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.