Market Commentary

An Oxford Harriman & Company Market Commentary

The S&P 500 gained 2.1% in August, extending its year-to-date return to 10.7%. Led by a 3.2% gain in Large Cap Value stocks, Growth trailed with a more modest 1.2% return. Health Care emerged as the best-performing sector, helping to lift the index, while Utilities and Technology lagged.

Bond markets also generated positive returns in August as Treasury yields declined. The U.S. Aggregate Bond Index rose 1.2%, while investment-grade corporates posted 1.0% and high-yield bonds returned +1.1%.

In international markets, a weaker U.S. dollar led to international equity outperformance vs. the U.S. Developed markets returned 4.5%, and emerging markets returned 2.7%, both outperforming U.S. stocks.

Fed Signals a Shift

The Federal Reserve has maintained interest rates throughout 2025 as inflation risks, particularly around tariffs, persisted. However, the tone turned when July’s jobs report indicated softer hiring and a rise in unemployment to 4.2%, echoing signs that higher borrowing costs are weighing on growth.

At the Jackson Hole symposium, Chair Powell acknowledged the shifting balance of risks, hinting at a potential rate cut as early as the September 17 meeting. This shift in narrative prompted both stocks and bonds to rally on expectations of a forthcoming policy pivot.

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