Commentary

Recent data reinforces a growing divergence between consumer optimism toward financial markets and their caution toward the broader economy. Surveys show that nearly 60% of consumers expect the stock market to climb over the next year, even as the University of Michigan’s Consumer Expectations Index hovers near its lowest levels since the pandemic and the 2008 financial crisis.

Last week’s Federal Reserve rate cut was widely anticipated, but the market reaction underscored just how unusual today’s credit environment has become. Corporate credit spreads, already compressed by historical standards, tightened further, underscoring investor appetite for corporate bonds even as Treasury yields remain elevated.

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.

The S&P 500 Index returned 2.3% in July, pushing its year-to-date return to 8.4%. Large Cap Growth stocks led the gains, increasing by 3.7%, while Large Cap Value increased by just 0.6%.

Volatility returned last week due to trade tensions and a sudden geopolitical shock, even though economic data showed moderating growth and lower inflation.

Investors digested a fragile U.S.–China trade truce, a steady but slowing labor market, and an escalation in the Israel–Iran conflict that sent safe-haven assets soaring. In this commentary, we break down the key developments, from Washington to the Middle East, and discuss what they mean for markets, interest rates, and long-term investors.

U.S. equities staged a powerful comeback in May, with the S&P 500 Index posting a 6.3% return, its strongest monthly gain since November 2023. Leading the charge were Large Cap Growth stocks, as the Nasdaq 100 surged 9.2% and the Russell 1000 Growth climbed 8.9%.

Equity markets were relatively unchanged this past week, with the S&P 500 finishing flat after giving back early gains spurred by news that the U.S. would temporarily exempt certain tech products from new China tariffs.

Equity markets were relatively unchanged this past week, with the S&P 500 finishing flat after giving back early gains spurred by news that the U.S. would temporarily exempt certain tech products from new China tariffs.