Weekly Market Watch Newsletter

Some of you may be surprised at how well stocks have done in recent months. The S&P 500 has gained more than 30% since its low on April 8, 2025, and is up 5% since the index fully recovered its early-year correction losses on June 27, 2025 (with a close of 6,144). The current bull market will likely celebrate its third birthday in October. Since the bear market low on October 12, 2022, the S&P 500 has gained about 81% (89% including dividends). This compares to the average cumulative gain of 168% for entire bull markets historically (since 1950), and a median gain of 111%, suggesting this bull may have more room to run. 

Topics of the Week:

• Economic Strength: The economy is expected to remain resilient and avoid a recession, which is typically good for stock performance.

• Inflation Moderation: Inflation is expected to moderate, leading to potential interest rate cuts that could help support stock prices.

• AI Investments: AI investments are anticipated to boost corporate profits and productivity.

• Fiscal Policies: Fiscal policies, including business tax incentives, are expected to drive economic growth in 2026.

• Historical Patterns: Historical patterns suggest that bull markets often continue for some time after recovering from significant declines.

What We Are Watching:

• Geopolitical Tensions: Ongoing geopolitical tensions could impact market stability.

• Trade and Tariff Uncertainties: Lingering trade and tariff uncertainties pose risks to the market.

• Job Market Stagnation: A stalled job market may affect economic growth.

• Sticky Inflation: Inflation remains a near-term concern despite expectations for moderation.

• Market Valuations: The market currently faces rich valuations and historically weak seasonality, which could lead to increased volatility.