Economic Update 9-02-2025

Economic data for the week included U.S. GDP growth for the 2nd quarter being upgraded a bit, and continued growth in personal income and spending. On the weaker side were durable goods orders, home prices, and consumer sentiment.

Equities were flat in the U.S. but fell several percent overseas. Bonds were little-changed for the week. Commodities rose a bit across the board, led by gold.

U.S. stocks ended slightly lower in a pre-Labor Day light trading week that many consider to be the end of the summer season. (As volumes have tended to pick up right after the holiday, often with less optimistic sentiment in the month of September, at least traditionally.) The President’s announcement that he would be firing Fed Governor Cook led to concerns over the Fed’s reputation, as noted earlier, but not to a major degree. The big earnings news of the week was Nvidia, which reported over-50% revenue growth year-over-year, which is exceptional by most any metric, yet underwhelmed investors a bit. In other technology news, it was announced that the U.S. government will be taking a 10% equity stake in Intel, in efforts to boost domestic chip manufacturing (which is currently dominated by Taiwan, in a geopolitically precarious position). By Friday, a stronger PCE inflation report soured the mood a bit, as it pointed to price pressures making their way through the system. By sector, energy stocks saw gains of several percent, followed by financials and communications, while defensives utilities and consumer staples lost several percent. Real estate stocks were little changed.

Foreign stocks saw losses of several percent, lagging U.S. stocks for the week. Europe performed the worst of the group, with concerns over U.S. tariff policy impacts, renewed inflation concerns, political consternation in France, and perhaps some lost patience regarding a Ukraine-Russia peace deal. French yield spreads moved upward again after the prime minister called another confidence vote, as the government can’t agree on budget reforms. There were threats of a need for IMF funding, which could have been extreme, but provide a negative sentiment shock to markets. In emerging markets, gains in Brazil were offset by declines elsewhere, similar to the rest of the world.

Bonds were generally flat for the week, with U.S. governments outpacing corporates slightly, as interest rates were little-changed across the yield curve. Foreign developed bonds outperformed emerging markets by a bit as well.

Commodities rose across the board, albeit slightly, led by precious metals, up a few percent to outpace the other groups. Crude oil prices bounced around within a tight range, ending just slightly higher at $64/barrel, with Ukraine attacks on Russian oil infrastructure offset by OPEC+ supply increases elsewhere. Natural gas prices moved sharply higher, due to lower inventories in the shoulder season and cooling needs in parts of the country along with various predictions for upcoming winter weather.

Period ending 8/29/2025	1 Week %	YTD %
DJIA	-0.11	8.30
S&P 500	-0.08	10.79
NASDAQ	-0.18	11.60
Russell 2000	0.22	7.06
MSCI-EAFE	-1.44	22.79
MSCI-EM	-0.76	19.02
Bloomberg U.S. Aggregate	0.16	4.99

U.S. Treasury Yields	3 Mo.	2 Yr.	5 Yr.	10 Yr.	30 Yr.
12/31/2024	4.37	4.25	4.38	4.58	4.78
8/22/2025	4.27	3.68	3.76	4.26	4.88
8/29/2025	4.23	3.59	3.68	4.23	4.92

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.