Source: FactSet
In July, markets gained clarity on U.S. trade and tax policy with the passage of the One Big Beautiful Bill Act. A globally diversified moderate-risk 60/40 stock, bond portfolio held steady as stocks gained, but bonds retreated.
U.S. stocks set new record highs in July, buoyed by a few mega growth stocks in the technology sector. International developed markets delivered negative returns for the month as the U.S. dollar rallied, impacting earnings expectations for many European and Japanese companies. Emerging market stocks gained as China continued to negotiate trade deals and increase domestic spending.
Within the S&P 500, technology led the way while defensive sectors like consumer staples and healthcare fell. This trend was also reflected in style performance, where growth stocks like technology outperformed dividend-paying value stocks.
Bonds fell as interest rates moved higher, fueled by expectations for fewer rate cuts and concerns about rising debt levels. The Fed held interest rates in July as it continued to wait for clarity on tariffs. Lower-quality bonds performed better, highlighting the strength of the economy to date.
Lastly, across other asset classes, commodity indices were mixed, with weakness in agricultural products and natural gas offset by rising oil and gold prices.
What is there one of in every corner and two of in every room?
LAST MONTH’S RIDDLE:
Forward I am heavy, backward I am not, what am I?
ANSWER: Ton.
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