STOCK MARKET RECAP JULY 2025

The stock market has continued its steady climb since the lows reached on April 8^th during the depths of the tariff concerns.  The S&P 500 has risen 28% since the low point in April and has climbed about 6% over the last month.  Both the S&P 500 and the Nasdaq are now up about 8% year-to-date.

In the chart below you can see the extreme price volatility in April and the steady move higher over the last three months.

The tariff uncertainty is not completely behind us, but the news seems to be improving.  The stock market believes that the final tariff rates will not be as high as originally feared.

Economic news has been mostly positive over the last month. Corporate earnings have mostly exceeded expectations for the most recent quarter.  Inflation ticked up slightly in June due to the tariffs, but we are still under 3%.  The July inflation reading will be very important for the market.  It will reflect more data on tariff related price increases, and it will be released on August 12^th. 

If the report on August 12^th is positive, the Fed will be able to begin lowering interest rates.  If the report indicates rising inflation, the outlook for rate cuts will be less bullish.

Oil prices have retreated as the situation in Iran seems to have stabilized. 

It was a wild ride to nowhere in March, April and May. Discipline and patience paid off over the last six months.  Following a disciplined system in times of volatility always produces better results than letting emotions drive your investing decisions. 

The biggest cloud that I see hanging over the stock market currently is valuation levels.  My valuation gauge indicates that the stock market (S&P 500) is 20% above its fair market value in July.  This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble.  We did reach a level 60% over fair market value in the dot-com runup before that bubble burst.   

I do not trade based on market valuation levels and you should not either.  It is just something to keep an eye on. 

Stay Disciplined My Friends,

Phil

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