Market Pulse

It was an eventful month for stocks, with the major averages ending July with gains. The Nasdaq advanced 3.7% and the S&P 500 gained 2.2% while the Dow advanced a slim .08%.  The broader gains were driven by a series of trade agreements, stronger-than-expected 2^nd quarter reports for both GDP and corporate earnings, along with continued developments and spending in AI. The move towards Artificial Intelligence continues to be the dominate theme in earnings reports and Wall Street analysts reports.

In fact, Morgan Stanley projects that AI related investments could exceed $2.9 trillion in spending from 2025 to 2028 on chips, servers and data-center infrastructure. Those investments could contribute as much as 0.5% of U.S. GDP growth this year and next. Those are impressive figures but we are unsure how long AI can mask other challenges.

As summer begins to wind down, it feels like the market risks are just heating up. Manufacturing appears to be slowing, the jobs picture is getting murky, and the wars in Ukraine and the Middle East remain tense and easily agitated. Details around trade policies and tariff rates remain unclear, and questions still remain around the possible upcoming Fed rate cut including size of the cuts and whether the cuts are too early, late, or just right.

We won’t know for a couple quarters, but our guess is that we get the expected 25 basis point reduction which won’t be a major market catalyst, suggesting that other factors will be the driving force. To provide some perspective on that, we can use a summer-time roadtrip as a metaphor. Whether your trip is part of a family tradition or you’re headed toward a new destination, along the way you will encounter a variety of road signs.  Deer Crossing, Blind Curve Ahead, Stay In Lane, Do Not Enter, and Yield to name a few. 

Right now, the Yield sign really grabs our attention because it announces the interaction of multiple forces on a single sign. Blindly speeding through the area can end in disaster but so can slamming on the brakes as you approach. A Yield sign calls for caution and demands the driver to grip the wheel, keep eyes on the road and process all the variables in order to proceed safely.

As we approach the intersection of what’s next for markets, the road seems smooth and the navigation system doesn’t show any specific slow-downs ahead.  We all know too well, that the issue at hand is that the nav system doesn’t update until after you see red brake lights and just passed the last exit to avoid the problem.  Going forward, trouble will show up, it’s just a matter of whether it’s a minor break-down on the shoulder or a flipped semi-truck trailer requiring a lengthy detour.

As a result, we continue to be positive on the remainder of 2025, but we are taking our foot off the gas and moving to the middle lane by reducing growth exposure and small-cap allocations. Valuations and expectations remain elevated in the fast, tech heavy lanes and there isn’t enough evidence to slide all the way over to the slow lane.  Instead, we prefer the middle of the road and continue to favor solid dividend companies and some added international exposure. We will also be looking for ways to add some small positions in sectors that have underperformed this year like energy, real estate, and healthcare.

 

Avoid Getting Scammed!

Financial scams targeting older Americans are exploding and artificial intelligence is playing a growing role. 

Losses reported by victims 60 and older soared from $122 million in 2020 to nearly $700 million in 2024, according to the Federal Trade Commission. The most devastating cases, for example, include victims who lose more than $100,000 also jumped eightfold to $445 million in the last four years.

Reports of scams draining $10,000 or more quadrupled over the same period, often wiping out life savings in days. Despite the sizable amount of loses, many experts suspect the FTC numbers understate the extent and scope of senior fraud.

The harsh reality is that senior fraud, like other forms is often underreported because it’s common for people to feel embarrassed or ashamed for falling for it, so they don’t tell anyone. 

The scams generally involve someone contacting consumers to alert them to a fake and urgent problem and then persuading them to transfer their money to “keep it safe,” but the money is being sent to the scammers.  According to the FTC, scams usually take three forms:

1) “Someone is using your accounts”

2) “Your information is being used to commit crimes”

3) “Your computer has been compromised.” 

Scammers often disseminate false information about steps you need to take or to get your personal information so they can access your accounts or steal your identity.  Here are three steps you can take to protect your accounts and information.

1. Slow Down Before Acting

Scammers often pressure you to “act now.” Take your time, verify the facts, and never rush into a decision.

2. Hang Up On Unfamiliar Callers

If you don’t recognize the number or the caller, let it go to voicemail. Most legitimate organizations will leave a message.

3. Guard Personal Information

Never give out your Social Security number, bank details, Medicare number, or passwords over the phone, email, or text unless you initiated the contact.

4. Verify Before You Click Or Answer

If you have been made aware of an issue, don’t immediately click or call the number provided.  Navigate to the site you know and trust and login there or call the official number, not the number provided

5. Shred Sensitive Documents

Before tossing bills, statements, or anything with personal info, shred it to prevent identity theft.