Market Commentary August 4, 2025

The Markets

Fast as a snail.

In July, the weather in Norfolk, England, was perfectly rainy as Bilbo Sluggins won the World Snail Racing Championship with a time of two minutes and 11 seconds. Fans and competitors traveled from the United States, South Korea, and France for the competition. Some arrived with trained gastropods (Training might include a strict lettuce diet and daily workouts climbing vertical surfaces). Others relied on entrants hired from the area’s world-renowned snail stables. Bilbo’s winning pace was just shy of the two-minute record set in 1995, but it was a vast improvement over 2023’s winning time of 7 minutes and 24 seconds.

Over the first half of 2025, the U.S. economy grew at a middling pace. Last week, a deluge of economic data suggested it may be losing steam. Here’s what we saw:

Economic growth moderated. The U.S. economy expanded faster than economists expected (3.0 percent annualized) from April through June. It was an improvement on the first three months of the year when the economy contracted (-0.5 percent annualized). Growth, as measured by gross domestic product (GDP), averaged about 1.25 percent over the first six months of the year, a slower pace than last year’s 2.8 percent.

“Because swings in trade and inventories have distorted overall GDP this year, economists are paying closer attention to final sales to private domestic purchasers, a narrower metric of demand. This measure rose at a 1.2 [percent] pace in the second quarter, the slowest since the end of 2022,” reported Augusta Saraiva of Bloomberg.

Consumer prices rose. One of the Federal Reserve’s favored inflation gauges, the personal consumption expenditures price index, showed prices rising 2.6 percent year over year in June. That’s higher than the 2.4 percent increase in May. Core inflation, which excludes volatile food and energy prices, rose 2.8 percent year over year in June, in line with May’s numbers which were revised higher.

“…while the higher tariffs aren’t expected to trigger an inflationary surge like Americans saw in 2022, the price hikes won’t be easy for everyone…It’s going to be uncomfortable for consumers…I think that they’re going to start to see it, and they’re going to notice that their paychecks aren’t going as far as they were,” opined an economist cited by Alicia Wallace of CNN Business.

Jobs growth slumped. The unemployment report created a bigger splash than usual. Fewer jobs were created (73,000) in July than economists had expected (115,000). In addition, revisions to May and June estimates were larger than normal. The number of jobs created in May dropped from 144,000 to 19,000, and June’s number dropped from 147,000 to 14,000. The baseline for a healthy level of job creation is 80,000 to 100,000 per month, according to a source cited by Megan Leonhardt of Barron’s.

“While the size of May and June’s revisions was surprising, there are non-political reasons for the wide swings. Economists have warned for years that declining initial response rates from employers, for instance, could create more volatility within the employment data,” reported Leonhardt.

Last week, major U.S. stock indexes moved lower, just as they did after last year’s July jobs report revisions. “Anyone who paid attention to markets last year will remember the August 2024 selloff, which was sparked by that year’s July jobs report. While last year’s report ultimately made the case for the Federal Reserve to cut interest rates by a half-point in September, the economy held steady and stocks eventually rebounded to fresh highs in the ensuing months,” reported Connor Smith of Barron’s.

U.S. Treasuries rallied as softer economic data increased the likelihood of a Federal Reserve rate cut in September, reported Ye Xie, Michael Mackenzie, and Elizabeth Stanton of Bloomberg.

Data as of 8/1/25	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor’s 500 Index	-2.4%	6.8%	16.0%	16.5%	15.5%	13.4%
Vanguard Total Intl Index (Foreign Stocks)	-3.2	16.7	16.0	11.9	9.1	6.2
Total Bond Market (U.S. Dollar Bonds)	1.0	4.7	3.9	1.9	-1.0	1.7
Gold (per ounce)	0.1	28.2	36.4	23.4	11.3	11.9
Bloomberg Commodity Index	-2.8	1.9	5.3	-5.7	7.6	1.1

S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

A SHIFT IN SENTIMENT. Sentiment has a profound influence on financial markets. When consumers are optimistic about their financial circumstances, they may spend more, lifting the economy. When they’re pessimistic, they spend less, dampening economic growth. Investor sentiment also affects markets. When investors are bullish, stock prices tend to rise. When they feel bearish, stock prices may fall. Over the past few weeks:

Investors were feeling bullish. The day before the employment report arrived last week, the latest AAII Investor Sentiment Survey showed bullish sentiment was greater than bearish sentiment. Investor optimism was fueled in part by strong company earnings reports. Last week, the net profit margin for companies in the Standard & Poor’s 500 Index was 12.3 percent for the second quarter. That’s above the five-year average of 11.8 percent, according to John Butters of FactSet. Together, S&P 500 companies have reported net profits above 12 percent for five consecutive quarters.

Investor confidence faltered last week. “America’s biggest companies are racing full speed ahead, but the economy could be headed for trouble. That’s not a great mix for the stock market, which suffered its worst week since May,” reported Avi Salzman of Barron’s.

Consumer sentiment was mixed. Consumer sentiment ticked higher in July, according to the University of Michigan’s Index of Consumer Sentiment. While participants were more optimistic about current conditions, they were less optimistic about the future. “A rise in sentiment among stock holders was partially offset by a decline among consumers who do not own stocks… Although recent trends show sentiment moving in a favorable direction, sentiment remains broadly negative. Consumers are hardly optimistic about the trajectory of the economy, even as their worries have softened since April 2025,” reported Surveys of Consumers Director Joanne Hsu.

How are you feeling about the markets and the economy? Are you optimistic, pessimistic, or somewhere in between?

WEEKLY FOCUS – THINK ABOUT IT

“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.”

― Marcus Aurelius, Roman Emperor

Best regards,

Waterford Advisors

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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.

* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.

* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.

* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.

Sources:

https://www.economist.com/britain/2025/07/29/what-the-world-snail-racing-championships-says-about-rural-england or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-04-25-Economist-What-World-Snail-Racing-Championships%20-%201.pdf

https://www.nationalgeographic.com/travel/article/130719-snail-races-escargot-world-championship-england

https://snailracing.world

https://www.bea.gov/sites/default/files/2025-07/gdp2q25-adv.pdf

https://www.bloomberg.com/news/articles/2025-07-30/us-economy-rebounds-with-3-gdp-growth-after-trade-reversal or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/08-04-25-Bloomberg-US-Economy-Expands-at-a-Moderate%20-%205.pdf

https://www.bea.gov/sites/default/files/2025-07/pi0625.pdf

https://www.bea.gov/sites/default/files/2025-06/pi0525.pdf

https://www.cnn.com/2025/07/31/economy/us-pce-consumer-spending-inflation-june

https://www.bls.gov/news.release/empsit.nr0.htm