The Federal Reserve held its benchmark rate
at 3.50%–3.75% for a fifth straight meeting, but in a divided 9–3 vote, with three officials
dissenting in favor of a quarter-point hike.
Chair Warsh reaffirmed the 2% target in direct
terms.
Second-quarter GDP looked soft at 1.5%
but was strong underneath: real final sales to
private domestic purchasers accelerated
to 3.9%, with the headline weighed down by a
surge in AI-related imports.
The bond market responded less to the hold
than to the resolve. Long-dated yields rose
sharply, with the 30-year climbing above
5.2%, its highest since 2007 — as the market
challenged the Fed to prove its commitment.
Oil rebounded as Middle East tensions flared
again, with WTI back into the mid-$80s —
elevated, but still well below the spring’s
highs.
Equities endured one of the fastest
momentum unwinds on record late in the
month. Leadership that had run vertically into
mid-June reversed violently, echoing the kind
of parabolic reversal last seen after the dot-com
peak.
Looking ahead, July inflation prints, the
balance of second-quarter earnings, and a
September FOMC meeting the market
increasingly views as “live” will shape the path
from here.
Equity Market Overview
July was a study in volatility. The major averages pushed into record territory through the first half of the month, with the Dow trading near all-time highs and the Nasdaq setting a fresh record before momentum turned. From there the tape reversed hard: a deepening sell-off in semiconductors and mega-cap technology gathered into a broad risk-off move, and on the day of the Federal Reserve’s decision the Dow fell 1,153 points (-2.2%), its worst session since April 2025, while the S&P 500 lost 1.5% and the Nasdaq-100 briefly slipped into correction. The final sessions then staged an equally violent rebound: the Nasdaq Composite rose 2.8% to snap a six-day losing streak, with the information technology sector up nearly 5% for its best day since April 2025, as second-quarter GDP and a blockbuster report from Microsoft reignited the AI trade. A record-fast unwind followed within days by one of the sharpest recoveries in more than a year captured the market’s split personality in miniature.
August ISS
August ISS
Performance Review & Outlook
Highlights
Equity Market Overview
July was a study in volatility. The major averages pushed into record territory through the first half of the month, with the Dow trading near all-time highs and the Nasdaq setting a fresh record before momentum turned. From there the tape reversed hard: a deepening sell-off in semiconductors and mega-cap technology gathered into a broad risk-off move, and on the day of the Federal Reserve’s decision the Dow fell 1,153 points (-2.2%), its worst session since April 2025, while the S&P 500 lost 1.5% and the Nasdaq-100 briefly slipped into correction. The final sessions then staged an equally violent rebound: the Nasdaq Composite rose 2.8% to snap a six-day losing streak, with the information technology sector up nearly 5% for its best day since April 2025, as second-quarter GDP and a blockbuster report from Microsoft reignited the AI trade. A record-fast unwind followed within days by one of the sharpest recoveries in more than a year captured the market’s split personality in miniature.
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Aspirations are what help make goals reality.