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The Quick Facts
- U.S. equities-maintained momentum, with the S&P 500 up 2.2% in July (8.6% YTD) and recorded 10 all-time highs amid low volatility.
- Growth stocks outperformed Value by 3.2%, while international stocks (MSCI EAFE +18.3% and MSCI EM +17.5%) continued to beat U.S. equities, year-to-date.
- The Federal Reserve (“Fed”) held rates steady at 4.25–4.50%, with dissent emerging as Chair Powell emphasized a data-dependent approach amid tariff-driven inflation risks.
- The One Big Beautiful Bill Act (“OB3”) was signed into law, extending TCJA provisions and adding new tax breaks, projected to widen the deficit by up to $4.2 trillion.
- Ethereum surged 49.2% in July after spot ETF approvals, while Bitcoin and gold posted strong YTD gains (+24.3% and +25.4%, respectively).
Despite ongoing tariff-related trade tensions and macroeconomic uncertainty, U.S. equities maintained their strong momentum in July, with the S&P 500 up 2.2%. Propelled by strong corporate earnings and improved consumer confidence, the S&P 500 recorded 10 all-time closing highs, demonstrating resilience amid economic challenges.
Beneath the U.S. stock market’s steady climb to record highs in July lies an unusual calm, with the S&P 500 experiencing its longest stretch of stability in two years. Throughout the month, the benchmark index has not moved more than 1% in either direction on any single day — a level of tranquility not seen since July 2023, according to Bloomberg data.
YTD through July 31, the S&P 500 gained 8.6%, significantly underperforming international markets. The MSCI EAFE Index surged by 18.3%, driven by strong performance in the Eurozone and other developed markets. The MSCI EM Index rose by 17.5%, supported by robust earnings growth and easing inflation in key emerging economies.
The Global Industry Classification Standard (GICS) sectors’ performance was mixed in July. Information Technology, Utilities, and Industrials were the leading sectors, while Health Care experienced the weakest performance, declining by 3.2% (-4.4% YTD).
July Asset Class Performance
Large Cap Value stocks underperformed Large Cap Growth, with the Russell 1000 Value Index up 0.6% in July (+8.8% over 12 months), compared to a 3.8% gain for the Russell 1000 Growth Index (+23.7% over 12 months). Over the past three years, Value has trailed Growth by 49.1%. The Russell 2000 Index, a key measure of smaller companies, also had a solid July with a +1.7% return (-0.1% YTD). The ESG segment, as measured by the MSCI USA ESG Select Index, rose 1.3% in July (+6.3% YTD), trailing the S&P 500 by 2.0% YTD. Over three years, the ESG index appreciated 52.4%, underperforming the S&P 500 by 8.1%.
At its July 30 meeting, the Fed held its benchmark federal funds rate steady at 4.25–4.50%, marking the fifth consecutive rate hold in 2025. Despite mounting political pressure from President Trump to deliver rate cuts, Chair Powell adopted a cautious, data-driven stance, stressing uncertainty around tariff‑driven inflation and labor market resilience. For the first time since 1993, two governors—Michelle Bowman and Christopher Waller—dissented, arguing for an immediate quarter-point rate cut. Powell declined to commit to easing in September, signaling future adjustments would depend on forthcoming economic indicators. Economic activity remains robust with Q2 GDP rebounding to 3%, inflation slightly above target, and a low unemployment rate supporting the policy‑hold consensus—maybe less so after the ugly July nonfarm payrolls report (including big May and June downwards revisions) posted on August 1.
The 10-year U.S. Treasury yield closed July at 4.37%, up from 4.23% a month earlier, and down from its October 2023 peak of 4.99%. The 2-year yield ended at 3.96%, up from 3.72% at the end of June. The yield curve dis-inverted in September 2024, with the 10-year now 42 basis points above the 2-year. The U.S. Aggregate Bond Index was down 0.3% in July (+3.7% YTD), while the Municipal Bond Index gave back 0.2%
(-0.5% YTD). The U.S. Corporate Investment Grade Index was up 0.1% for the month and up 4.2% YTD.
On the tariff front, the Trump administration’s 90‑day suspension of country‑specific reciprocal tariffs was set to lapse on July 9, restoring baseline tariffs of 10% on most imports, with higher rates ranging up to 50% depending on bilateral trade imbalances. Between July 4 and July 14, new tariff notices were issued to dozens of trading partners—including Brazil, Canada, and Japan—outlining the precise rates that would go into effect on August 1, 2025. However, later in the month, high‑stakes diplomacy shifted the outlook, and on July 27, the U.S. and EU finalized a trade deal that replaced a threatened 30% levy with a 15% reciprocal tariff on EU goods, along with commitments of hundreds of billions in bilateral investments and energy purchases.
The One Big Beautiful Bill Act (“OB3”) was signed into law by President Trump on July 4, 2025, following its passage by Congress. OB3 permanently extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced new temporary deductions (effective 2025–2028) for overtime pay, tips, and senior taxpayers; expanded estate and gift exclusion thresholds; and continued to refine business expensing, estate, and international tax rules. The bill is projected to significantly widen the federal budget deficit. The Congressional Budget Office (CBO) and independent analysts estimate the bill could add between $3.5 to $4.2 trillion to the national debt over the next decade.
Gold was down 0.4% in July ($3,290/oz) with YTD gains of 25.4%. Oil (WTI Crude) gained 6.4% to $69.3/bbl, yet is still down 3.4% YTD. Bitcoin extended its 1H gains, ending July at ~116,491, up 8.9% for the month as investors continued to seek alternatives to traditional assets amid macroeconomic uncertainty. The SEC approved several spot Ethereum ETFs in July, marking a major milestone for crypto adoption. Ethereum’s price surged 49.2% in July (+11.6% YTD), fueled by billions in ETF inflows. The U.S. Dollar Index (DXY) gained 3.2% in July, reducing its YTD decline to 7.9%, amid concerns over fiscal sustainability and the U.S. dollar’s global reserve status.
The VIX Index, often called the “fear gauge,” traded in a narrow 14.5/19.5 range the entire month of July as equity market volatility remains below its 30-year average of ~20. Meanwhile, the ICE BofA MOVE Index (MOVE), which measures U.S. Treasury market volatility, eased further in July, closing at 79.8, after a spike to 140 in early April.
Chart of the Month – Bull Markets Build Wealth
Bull markets are the true engines of long-term wealth creation. Over time, patient and consistent investors are rewarded as markets trend upward, fueled by economic growth, innovation, and corporate profitability. While short-term fluctuations and market corrections are inevitable, the historical trajectory of markets shows a persistent upward climb driven by bull cycles.
Bear markets, though dramatic, are typically short-lived. For instance, the recent market decline of 18.7% (short of 20% to be considered a bear market) over just 34 days shook investor confidence, but the recovery was swift, with markets reaching new all-time highs in only 55 days. This rapid recovery reinforces a core investment principle: markets are inherently resilient. Trying to time these ups and downs is not only difficult, but often counterproductive.
Instead, long-term success in investing comes from discipline—investing consistently, through both the highs of bull markets and the lows of bear markets. As of now, we remain firmly in an equity bull market that began in September 2022, with gains of 74% to date. This underscores the value of staying the course and trusting the process.
Since 1925, the S&P 500 has spent about 85% of the time in bull markets and only around 15% in bear markets. Bull markets have been more frequent, lasting much longer on average with median gains around 210%, while bear markets have been shorter, averaging just over a year, with a median decline of about 30%. Overall, the market’s long-term trend has been strongly upward, rewarding investors who stay invested through volatility.
Bull and Bear Market Returns and Time Periods – S&P 500
Quote of the Month
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” – Sir John Templeton
Major Asset Class Dashboard
Curated by Julien Frazzo, Deputy Chief Investment Officer and Michael G. Dow, CAIA, CFA®, Chief Investment Officer
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Beacon ‘Pointe of View’ – A Market Update July 2025
Important Disclosure: The information contained in this article is for general informational purposes only. Opinions referenced are as of the publication date and may be modified due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Past performance is not a guarantee of future results. Beacon Pointe has exercised all reasonable professional care in preparing this information. The information has been obtained from sources we believe to be reliable; however, Beacon Pointe has not independently verified or attested to the accuracy or authenticity of the information. The discussions, outlook, and viewpoints featured are not intended to be investment advice and do not consider specific investment objectives or risk tolerance you may have. All investments involve risks, including the loss of principal. Consult your financial professional for guidance specific to your circumstances. This document has been prepared with the assistance of Microsoft Copilot, an AI-powered tool designed to enhance productivity and provide support in drafting, editing, and organizing content. Microsoft Copilot leverages advanced AI models to generate text based on user input. Although Copilot generates original content based on user input, there is a risk that the generated text may inadvertently resemble existing works that may not be properly cited.
