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Monthly Market Update – 2025 Year in Review & The Situation in Venezuela

January 6, 2026

2025 was a historically strong year for markets despite the many events that took place along the way. The past year delivered no shortage of headlines including April’s tariff announcements, ongoing developments in artificial intelligence stocks, the passage of the One Big Beautiful Bill Act, and more. Yet through it all, investors are likely happy as U.S. stocks rose to new record highs, international markets outperformed, and bonds continued their rebound. The S&P 500 has now generated double-digit returns in six of the past seven years and has nearly doubled in value since the market bottom in 2022.

The past year reinforces the lesson that the best way to weather uncertainty is to remain disciplined and focused on long-term goals. As we look ahead to 2026, understanding what drove markets last year can help investors navigate the challenges and opportunities that lie ahead.

Key Market and Economic Drivers in 2025

  • The S&P 500 gained 17.9% with dividends in 2025, achieving 39 new all-time highs. The Dow Jones Industrial Average rose 14.9% and the Nasdaq returned 21.2%.
  • The VIX, a measure of stock market volatility, remains low by historical standards, finishing at 14.95 after climbing as high as 52.33 in April.
  • The Bloomberg U.S. Aggregate Bond Index gained 7.3%, its best performance since 2020. The 10-year Treasury yield ended the year lower at 4.17%, down from 4.57% at the start of the year.
  • International developed markets and emerging markets each gained over 30% in U.S. dollar terms based on the MSCI EAFE Index and MSCI EM Index, respectively.
  • The U.S. dollar index ended the year at 98.32, falling 9.3% from 108.49 at the beginning of the year. The dollar reached a low of 96.63 in September.
  • Bitcoin experienced a decline of about 6.5% from $93,714 to $87,647, after rising as high as $125,260 in October.
  • Gold prices rallied throughout the year, finishing at $4,341 per ounce for a 64% gain. Silver prices also rose to $70.60 per ounce from $29.24 at the start of the year.

Major events in 2025

Many of the events of the past year were “known unknowns.” This concept was made famous by former Secretary of Defense Donald Rumsfeld, who distinguished “known unknowns” from “unknown unknowns.” For investors, this distinction can be helpful since the former are uncertainties we can anticipate. When markets react to these events, investors can be prepared in advance and avoid being caught off guard.

Concerns around tariffs, for instance, were very much on investors’ radars ahead of April 2. While this didn’t diminish the market reaction due to the size of these tariffs, it did allow the market to rebound quickly once events played out. Investors also knew the Fed would likely adjust rates once the job market weakened. Many also expected a new tax bill to pass given that Republicans control both houses of Congress.

Even concerns around AI, which are perhaps the biggest uncertainty for markets today, have also been at the top of investors’ minds. While the DeepSeek moment in January, when a Chinese AI company showed that models could be created and run more cheaply, was unexpected, the parallels to the dot-com boom and past surges in capital expenditures by large companies are well understood.

To summarize the major market-moving events over the year, here are the top 10:

  • January 20: President Trump is inaugurated.
  • January 21: The $500 billion private-sector Stargate project is announced.
  • January 27: AI stocks fall on DeepSeek news.
  • April 2 to 9: “Liberation Day” tariff announcement leads to a market correction. This was followed by a 90-day pause which sparked a rally.
  • July 4: The “One Big Beautiful Bill Act” is signed into law, extending many Tax Cuts and Jobs Act provisions.
  • September 17: The Fed begins cutting interest rates again.
  • September 22: Nvidia and OpenAI announced a major strategic partnership and investment, raising concerns of “circular deals.”
  • October 1: The government shuts down for what would be a record-setting 43 days.
  • October 14: Jamie Dimon warns of “cockroaches” after the bankruptcies of Tricolor and First Brands.
  • December 16: According to the BEA, the unemployment rate hit a four-year high of 4.6% in November.

Three key themes defined the past year

What themes drove markets across these events? First, it’s hard to miss the fact that artificial intelligence dominated market narratives throughout 2025. From massive infrastructure investments to concerns about market concentration, AI grew as an important source of economic growth and market returns. The Magnificent 7 stocks now represent around one-third of the S&P 500, creating concentration risk that means most investors have exposure to these stocks whether they realize it or not. Recognizing this when crafting investment strategies and financial plans will only grow in importance.

Second, tariff policy created uncertainty but has had less economic impact than expected. Tariffs on imported goods have risen sharply for many trading partners, yet the feared economic consequences largely failed to materialize. This is because companies adapted, tariffs were paused or scaled back, and consumer spending remained strong. For investors, this highlights that the outcomes of policy changes in Washington, whether its trade or federal finances, do not always have an obvious effect on the economy or markets.

Third, many asset classes performed well in 2025. International stocks outperformed U.S. markets, due in part to the decline in the U.S. dollar. Bonds generated strong returns and have nearly recovered their losses from 2022. Other individual assets including gold also had record years. So, benefiting from all of these asset classes is less about making individual investments, but about having the right asset allocation that can take advantage of opportunities while managing sources of risk.

Looking Ahead: Venezuela, Oil, and the Impact on Portfolios

The arrest of Venezuelan President Nicolás Maduro by U.S. forces represents an unexpected and significant geopolitical event. As has been widely reported, the U.S. military successfully conducted an operation that detained Maduro on charges related to drug trafficking and corruption. President Trump stated in a press conference that the United States will “run” Venezuela and work to expand its oil production.

While the humanitarian and geopolitical implications for the Venezuelan people and the region are most important, investors may naturally wonder what all of these issues mean for their portfolios. The move raises many questions around the role of the U.S. in the region, whether this will pave the way for democratic elections in Venezuela, the effect on the narcotics trade, if oil production will increase meaningfully, and how it will impact the sphere of influence of countries like Iran and China. 

History provides important context: geopolitical events often create short-term market volatility, but their long-term market impact tends to be limited. This is because these events don’t typically change the direction of broad economic and market drivers, even if oil production is affected. This has certainly been true of geopolitical conflicts in recent years, including in Ukraine and the Middle East. Understanding this pattern can help investors maintain perspective and focus on the factors that historically drive market performance.

Historical perspective

First, it’s helpful to briefly review the history of U.S. involvement in the region, since the discussion around U.S. intervention in Venezuela is complex and spans topics from international law to regional stability. The Monroe Doctrine, first articulated by President James Monroe in 1823, established that European powers should not interfere in the Western Hemisphere. Applied to recent events, it would suggest that South America represents the country’s “backyard,” so any hostile act in the region would be viewed as an act against the United States. President Trump has referred to this idea, most recently calling his foreign policy views the “Don-roe Doctrine.”

This is far from the first time the U.S. has intervened in a Latin American country. For example, in 1990, exactly 36 years ago to the day, the U.S. captured Manuel Noriega in Panama based on drug trafficking charges. And while the latest operation in Venezuela was generally unexpected, Maduro has been under indictment by the U.S. Department of Justice since 2020 on charges of narco-terrorism and drug trafficking. The Biden administration had maintained sanctions on Venezuela and, in early 2025, placed a $25 million bounty on Maduro, which was then raised to $50 million by the Trump administration.

Like other U.S. military and law enforcement actions, there are many interrelated objectives. The stated reason for the operation was to target narco-terrorism, which Maduro and 14 Venezuelan officials were criminally charged with by the U.S. in 2020. The fact that many nations view Maduro’s rule as illegitimate, based on the country’s 2024 election, strengthens this objective. Prior to the presidencies of Maduro and Hugo Chávez, Venezuela was a democracy and one of the wealthiest in the region.

For long-term investors, the most important point is that geopolitical risk is a normal part of investing, even if the specific circumstances differ each time. These news stories may also feel more concerning since they differ from everyday business news about corporate earnings and economic data. The chart above highlights many significant geopolitical events over the past few decades. In most cases, markets recovered within weeks or months, if they were affected at all.

Oil connects geopolitics to financial markets

For investors, the effect on oil prices may be the most consequential issue. This is because the primary channel through which geopolitical events affect financial markets is through commodity prices, and oil remains central to the global economy. Venezuela is important in this regard since the country possesses the world’s largest proven oil reserves at approximately 304 billion barrels, according to the U.S. Energy Information Administration. To put this in perspective, this exceeds even Saudi Arabia’s 267 billion barrels.

Despite these vast reserves, Venezuela produces far less oil than other countries. Venezuelan oil production has declined dramatically over the past two decades due to mismanagement, lack of investment in infrastructure, and sanctions. Today, production has fallen to less than 1 million barrels per day, compared to the U.S. of nearly 14 million.1 If Venezuelan production is increased, it will likely take time and investment to meaningfully add to global supply. This minimizes the immediate effect on markets.

Over time, U.S. energy companies could see an opportunity to increase their access to these reserves, although a lower oil price due to greater supply could offset some of this upside. For the broader economy and consumers, any shock to markets could potentially be positive since increased Venezuelan production would place downward pressure on oil prices over time. This makes it different from other conflicts such as Russia’s invasion of Ukraine in 2022, which disrupted existing supply and drove oil prices to nearly $128 per barrel. That situation worsened post-pandemic inflationary pressures and pushed average U.S. gasoline prices above $5 per gallon.

Current oil prices remain far below those peak levels. In fact, prices have been subdued over the past year, with WTI crude trading below $60 per barrel and Brent crude just around that level. According to reports, the immediate response to recent events in Venezuela by OPEC+ countries has been to keep their production quotas steady, suggesting they are monitoring the situation before making strategic adjustments. The fact that the U.S. is now the largest producer of oil and gas in the world helps to further reduce the impact on the domestic economy.

That said, it’s important to remember that energy prices are difficult to predict with accuracy, and the U.S. is still dependent on crude imports. When Russia invaded Ukraine, many predicted that oil and natural gas prices would remain elevated indefinitely, especially with a harsh winter forecasted for Europe. However, prices stabilized and began declining far sooner than many projected. This is a reminder that, since oil is a global commodity, there are many factors that can unexpectedly affect prices.

Venezuela plays a minimal role in global markets

Another key fact for investors is that Venezuela plays an insignificant role in global financial markets. Its stock market, the Bolsa de Valores de Caracas, is small and illiquid, with limited foreign participation. It is not included in the MSCI Emerging Markets Index, so most international investors have minimal or no direct exposure to Venezuelan stocks. The country’s economic collapse over the past decade has essentially excluded it from emerging market portfolios.

When it comes to the bond market, Venezuela has been in default since 2017 when it failed to make payments on its debt. Bondholders have been negotiating restructuring terms, but the bonds trade at deeply distressed levels reflecting the expectation of significant losses. 

The situation in Venezuela will continue to evolve, and there may be additional developments that capture market attention. The indirect effects on oil prices and uncertainty are likely to outweigh the direct effects from the country and its stock market. Rather than trying to predict exactly how the situation might play out, investors should instead focus on aligning their portfolios with their financial goals.

The bottom line? The events of early 2026 are the first real test of the lessons we learned in 2025. Last year proved that markets can climb a “wall of worry”—generating record highs despite tariffs, political shifts, and economic fears.

While the situation in Venezuela is historic, the investment implication remains the same: Headlines generate noise, but fundamentals drive returns. The market shrugged off the “known unknowns” of 2025, and history suggests it will look past today’s geopolitical headlines as well. By focusing on your long-term plan rather than the daily news cycle, you position yourself to capture growth regardless of where the next crisis emerges.

References

Click to access 3dtab.pdf

 

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Monthly Market Update – November 2025

December 3, 2025

In November, markets experienced a brief period of volatility that affected many asset classes. While major indices have delivered strong year-to-date returns across stocks, bonds, and international investments, investors continue to worry about artificial intelligence-related stocks and the path of Fed rate cuts. At the same time, the government shutdown delayed the publication of key economic reports, making it more difficult to judge how the economy is doing.

Despite this market volatility, many asset classes stabilized and rebounded by the end of the month. For long-term investors, this underscores the importance of maintaining an appropriate portfolio that can navigate the ups and downs of the market. Successful investing requires staying focused on long-term goals rather than chasing short-term performance or reacting to headlines.

What drove November’s performance and how can investors maintain perspective as we approach the end of the year?

Key Market and Economic Drivers

  • The S&P 500 rose slightly by 0.1% in November, the Dow Jones Industrial Average gained 0.3%, and the Nasdaq declined 1.5%. Year-to-date, the S&P 500 is up 16.4%, the Dow is up 12.2%, and the Nasdaq is up 21.0%.
  • The VIX, a measure of stock market volatility, finished lower at 16.35 after climbing as high as 26.42 mid-month.
  • The Bloomberg U.S. Aggregate Bond Index rose 0.6% in November but is up 7.5% year-to-date. The 10-year Treasury yield ended the month lower at 4.02%, after briefly falling under 4%.
  • International developed markets gained 0.5% in U.S. dollar terms based on the MSCI EAFE Index, while emerging markets fell 2.5% based on the MSCI EM Index. Year-to-date, the MSCI EAFE Index has gained 24.3% and the MSCI EM Index 27.1%.
  • The U.S. dollar index ended the month at 99.46 and briefly crossed the 100 level.
  • Bitcoin experienced a significant decline of about 17% in November, ending the month at $91,176.
  • Gold prices ended the month higher at $4,218 but still below the October all-time high of $4,336.
  • The September jobs report, which was delayed due to the government shutdown, showed that the economy added 119,000 new jobs and the unemployment rate ticked higher to 4.4% that month. There will be no October jobs report.

Markets briefly experienced a “risk off” environment

November saw investors temporarily move away from risk assets such as technology stocks, high-yield bonds, cryptocurrencies, and other investments. This was primarily due to questions around the sustainability of AI investments and investors adjusting their expectations around upcoming Fed rate cuts. There have now been six declines of 5% or worse for the S&P 500 this year, the most since 2022, but still close to the historical average. Some major asset classes rebounded in the final days of the month, and the S&P 500 ended slightly positive.

During the month, AI-related technology stocks experienced their worst week since April. Concerns about their spending and debt levels, profit margins, and questions around a potential bubble created volatility. Yet beneath this, fundamentals remained strong with companies such as Nvidia reporting healthy revenue and earnings growth for the third quarter. Some stocks, including those in the Magnificent 7, rebounded following these reports.

Cryptocurrencies experienced a sharp correction during this risk-off period. Bitcoin fell over 30% from its early October highs above $125,000, briefly trading below $85,000 and wiping out its year-to-date gains. While the adoption of cryptocurrencies by investors has grown, such periods demonstrate that these and similar assets can be highly speculative and prone to boom-and-bust cycles. For this reason, ongoing risk management and maintaining a proper asset allocation continue to be important.

The bond market rose in November, partly driven by a decline in long-term interest rates with the 10-year Treasury yield briefly falling below 4% once again. This was the result of new expectations around government policy which could result in lower rates in the long run. Year-to-date, the Bloomberg U.S. Aggregate Bond Index has gained 7.5%, the best performance since 2020. This has helped provide balance to diversified portfolios.

The government shutdown ended but economic uncertainty remains

The longest government shutdown in history ended after 43 days, but the federal government will only be fully funded through the end of January 2026. This means that political uncertainty will be in the headlines again in only a couple of months. That said, markets were generally able to look past the shutdown, even with greater challenges due to a lack of economic data.

The Bureau of Labor Statistics released the long-awaited September jobs report, which was originally scheduled to be published in October. This report showed that job gains exceeded expectations that month, rebounding from weakness over the summer. However, the revised figures show that 4,000 jobs were lost in August, the second month of negative jobs growth this year. The unemployment rate edged up to 4.4% in September, its highest level since October 2021, although this is still low by historical standards.

A full October jobs report will not be published since surveys of households and businesses were not conducted during that month, but some of the data will be published with November’s report on a delayed basis.

Market expectations for the next Fed rate cut have shifted

These data delays mean that the Federal Reserve will enter its mid-December meeting without the full economic picture. Expectations for a rate cut at the next Fed meeting have shifted dramatically, with the probability dropping in mid-November before rebounding once again. At the moment, market-based expectations suggest the Fed will cut rates in December and then again in April or June 2026.

Other economic data, such as consumer confidence, have also worsened. The preliminary estimate of the University of Michigan’s Index of Consumer Sentiment declined from 53.6 to 50.3 in November. This reflects ongoing concerns among Americans about job security, higher prices, and their overall financial situations. While many households are feeling the financial pinch, poor sentiment over the past few years has not translated into reduced spending or corporate revenues.

What This Means for Your Year-End Plan

While the market data tells us what happened in November, your financial plan dictates what happens next. Here is how we are translating this month’s trends into year-end strategy:

  • Turn Volatility into Tax Efficiency: As noted above, the “AI volatility” and the dip in the Nasdaq created a distinct divergence in the market. For taxable accounts, this is a prime opportunity for tax-loss harvesting—capturing losses in specific volatile sectors to offset gains elsewhere, lowering your 2025 tax bill without exiting the market.
  • Rebalance into Strength: With bonds rallying significantly (up 7.5% YTD) and equities holding steady, your portfolio’s weighting may have shifted. We use year-end reviews to trim what’s overweight and buy into underappreciated areas, ensuring your risk exposure stays aligned with your life goals.
  • Leverage Gains for Good: With the S&P 500 up 16.4% year-to-date, you likely hold positions with significant appreciation. Instead of writing a check to charity this holiday season, consider gifting appreciated securities. This allows you to support your favorite causes while potentially eliminating the capital gains tax you would owe if you sold the stock first.
  • Focus on the “Signal”: The data shows a split between how people feel (Consumer Sentiment down to 50.3) and how they act (spending remains resilient). The lesson? Don’t let gloomy headlines derail your plan. The economic fundamentals remain stronger than the sentiment suggests.

The bottom line? November’s market volatility and ongoing uncertainty across the economy are reminders that swings in the stock market are normal. Investors should maintain a broader perspective as we approach year-end.

 

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Monthly Market Update – October 2025

November 4, 2025

The stock market continued its strong performance in October despite uncertainty from a government shutdown and renewed trade tensions with China early in the month. Many major indices reached new all-time highs after recovering from a brief period of volatility. Bonds also contributed positively to portfolios as interest rates declined, fueled partly by the Federal Reserve’s second consecutive rate cut.

Despite positive gains, the month was not without challenges. The ongoing government shutdown captured headlines and raised recession concerns, while a brief “tariff tantrum” over rare earth metals caused the largest single-day market decline since April. However, markets quickly recovered, reinforcing the importance of not overreacting to headlines. These market dynamics also pushed gold to a new record level, before pulling back toward the end of the month.

The Social Security Administration also announced a 2.8% cost-of-living adjustment for 2026, a modest increase compared to recent years that may not keep up with the rising expenses that many retirees face. Combined with falling interest rates on cash holdings, this underscores the importance of balanced portfolios that provide both income and growth.

Despite these market swings, October’s performance reinforces that maintaining a portfolio aligned with long-term goals remains the best approach to navigating uncertainty.

Key Market and Economic Drivers

  • The S&P 500 rose 2.3% in October, the Dow Jones Industrial Average 2.5%, and the Nasdaq 4.7%. Year-to-date, the S&P 500 is up 16.3%, the Dow is up 11.8%, and the Nasdaq is up 22.9%.
  • The Bloomberg U.S. Aggregate Bond Index gained 0.6% in October. The 10-year Treasury yield ended the month lower at 4.08%.
  • International developed markets gained 1.1% in U.S. dollar terms using the MSCI EAFE index, while emerging markets jumped 4.1% based on the MSCI EM index. Year-to-date, the MSCI EAFE index has gained 23.7% and the MSCI EM index 30.3%.
  • The U.S. dollar index stabilized and rose slightly to 99.8.
  • Bitcoin fell somewhat in October, ending the month at $109,428.
  • Gold prices ended the month lower at $3,997, after reaching a new all-time high of $4,336 earlier in the month.
  • The Consumer Price Index was reported late due to the government shutdown, but showed that prices rose 3.0% on a year-over-year basis in September. This report is used to calculate the Social Security cost-of-living adjustment (COLA), which will be 2.8% in 2026.
  • Other economic data, such as the monthly jobs report, has been delayed due to the government shutdown.

Markets were unfazed by the government shutdown

October began with the government shutdown, which is now approaching the longest on record. This occurs when Congress is unable to agree on a new budget or a plan to extend the deadline. Many agencies, including those that provide timely economic reports, have been operating at minimal levels since then.

While the shutdown creates hardships for many federal workers and their families, it’s important to maintain perspective when it comes to our portfolios. Historically, government shutdowns have not had lasting effects on financial markets since government spending is typically postponed, rather than lost entirely. The longest previous shutdown lasted 35 days during 2018 to 2019, yet the S&P 500 went on to gain 31.5% in 2019. There is no guarantee this will happen again, but it’s a reminder that markets often look past these events.

There are also concerns around government layoffs, known as reductions in force. From the perspective of the broader economy, federal government employment represents only 1.8% of the total workforce, and recent reduction-in-force notices amount to just 0.002% of total U.S. employment. While the shutdown creates real difficulties for affected workers and interrupts government services, its overall economic impact remains limited.

Trade tensions created brief volatility

 

The market also experienced its sharpest one-day decline since April, driven by escalating tensions between the U.S. and China over rare earth metals, and the threat of 100% tariffs on Chinese goods. Rare earth metals represent one of China’s greatest points of leverage in trade discussions. China controls approximately 70% of global rare earth production and nearly 90% of processing capacity, creating significant supply chain dependence.

Despite the brief selloff, markets quickly recovered following softer language from the White House. Presidents Trump and Xi then met near the end of the month, which resulted in a de-escalation and a 10% decline in the tariffs imposed on China.

This pattern has repeated throughout the year, with trade-related concerns causing temporary pullbacks followed by a market recovery. Specifically, the S&P 500 has risen 37% from its April low and has set 36 new all-time highs this year through October. Of course, the market never moves up in a straight line, so this is a reminder that short periods of market volatility are normal and expected.

The Fed continues its easing cycle

At its October meeting, the Federal Reserve lowered interest rates by 0.25% to a range of 3.75% to 4.00%, marking its second consecutive rate cut. This decision reflects the Fed’s efforts to support economic growth while navigating inflation and a weakening labor market. In its statement, the Fed noted that “uncertainty about the economic outlook remains elevated” and that “downside risks to employment rose in recent months.”

Market expectations suggest another rate cut is likely by January, with one or two additional rate cuts in 2026. Beyond policy rates, the Fed also announced it would stop shrinking its balance sheet in December. This means they would continue to buy bonds, effectively maintaining supportive monetary policy. Over the past three years, the Fed has tightened policy by reducing its balance sheet by $2.2 trillion, so ending this process provides additional economic support. For investors, declining interest rates and supportive monetary policy have historically created opportunities across asset classes.

Retirees face challenges from modest COLA and lower rates

The Social Security Administration announced a 2.8% cost-of-living adjustment (COLA) for 2026, reflecting continued but slowing inflation. For the average Social Security beneficiary, the monthly benefit will be about $2,064, an increase of only $56. While any increase helps, this modest adjustment pales in comparison to the 8.7% increase in 2023, which was the largest since 1981.

The challenge for retirees is that the COLA is calculated using an index that may not reflect the inflation that they actually experience. Healthcare costs, housing expenses, and other categories that weigh heavily in retiree budgets have often risen faster than the overall index. For example, medical care services rose 3.9% over the past year, health insurance increased 4.2%, and home insurance climbed 7.5%. Food prices increased 3.1%, but meat, poultry, and fish rose 6.0%.

With life expectancies continuing to increase—many retirees will live into their 90s—planning for multi-decade retirement periods requires portfolios that can provide both income and growth. Understanding how to structure portfolios for these extended timeframes, while managing withdrawal rates and adapting to changing market conditions, underscores the value of comprehensive financial planning.

The bottom line? Despite government shutdowns, trade tensions, and other uncertainties, markets continued their strong performance in October. Maintaining a portfolio that can navigate these challenges remains the best strategy as we approach the end of the year.

 

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Quarterly Market Update – September 2025

October 6, 2025

Investors experience market swings as a normal part of investing, and this year has been no exception. While market declines – such as the tariff-driven sell-off – can be uncomfortable, they also create opportunities to invest at more attractive valuations. On the other hand, when markets recover and climb to record levels, some investors may feel uneasy even if the underlying fundamentals are still strong. In both scenarios, holding portfolios that can weather all phases of the market cycle, with an eye toward long-term financial goals, becomes even more important.

As we begin the final quarter of the year, investors are facing conflicting signals. The S&P 500 reached new all-time highs in the third quarter as markets continued to be supported by strong corporate earnings and enthusiasm for artificial intelligence. At the same time, the labor market has weakened considerably since the beginning of the summer, raising concerns over the underlying economy and the financial health of consumers. Despite this, GDP growth has been strong, and inflation has largely stayed in check.

Market environments like these are when the benefits of long-term investment and financial plans shine. Rather than reacting to headlines and economic reports, it’s more important to hold well-constructed portfolios that can withstand market shifts. This requires understanding the underlying trends that will shape markets in the quarters ahead.

Key Market and Economic Drivers in Q3

  • The S&P 500, Nasdaq, and Dow Jones Industrial Average gained 7.8%, 11.2%, and 5.2%, respectively, during the third quarter, with all three reaching new record highs in September. Year-to-date, they have risen 13.7%, 17.3%, and 9.1%.
  • The Bloomberg U.S. Aggregate Bond Index gained 2.0% in the third quarter and is now up 6.1% year-to-date. The 10-year Treasury yield ended the quarter at 4.15% after falling as low as 4.02% in September.
  • Developed market international stocks (MSCI EAFE) rose 4.2% and emerging market stocks (MSCI EM) increased 10.1% in the quarter.
  • Gold rallied to a new record level of $3,841 per ounce, representing a 16% gain during the quarter.
  • Bitcoin ended at $114,641 for a gain on the quarter, although it is still below its August peak.
  • The U.S. Dollar Index fell to a low of 96.63 in September before ending at 97.78 for the quarter. So far this year, the dollar has declined 9.9%.
  • The Consumer Price Index increased 2.9% in August while core CPI rose 3.1%.
  • Only 22,000 net new jobs were created in August according to the latest report by the Bureau of Labor Statistics. Since May, the average monthly pace of job gains has been only 26,800.
  • At its September meeting, the Federal Reserve cut rates by 0.25% to a range of 4% to 4.25%.

Valuations continue to climb toward historic levels

 

One of the most important considerations for long-term investors is the level of valuations for the overall market. Rather than simply focusing on the price of the market, valuations tell us what we’re getting for that price in terms of earnings, cash flow, sales, dividends, and other corporate fundamentals. While high valuations suggest that investors are optimistic, they also imply that expectations may be too lofty in some parts of the market.

The accompanying chart demonstrates this with the Shiller price-to-earnings ratio for the S&P 500. The current value of 38x is well above the 35-year average of 27x and is approaching levels last seen during the dot-com bubble. This measure provides a longer-term perspective than standard P/E ratios by using a ten-year history of earnings, adjusted for inflation.

The fact that valuations are at these levels should not be surprising given the strong rebound of the past two quarters. The S&P 500 has climbed 34% since April 8, resulting in a double-digit gain for the year. Technology stocks across various sectors have led the market on the way up, just as they led it on the way down. The Magnificent 7 stocks, for instance, have risen 61% since the bottom. While investors are increasingly questioning whether corporate spending on artificial intelligence will generate a positive return, the reality is that this has been a key driver of the broader market and business investment.

It’s important to note that valuations don’t predict short-term market movements and are not market timing tools. Instead, they serve as core inputs into the asset allocation process. While broad market valuations are elevated, this is not the case across all parts of the market. For example, small-caps, value stocks, and international stocks have more attractive valuations than large-caps, growth stocks, and U.S. stocks at the moment. This can create opportunities for investors with a broader perspective and longer time horizons.

The Fed is cutting rates amid job market weakness

The Federal Reserve cut interest rates by 0.25% in September 2025, resuming its easing cycle after holding rates steady through much of the year. This decision reflects the Fed’s attempt to balance stubborn inflation that remains above the 2% target with a weakening labor market. This rate cut was widely expected and has served as a tailwind for markets in recent months.

There are many factors that make this cutting cycle unique. Historically, the Fed has been forced to cut rates in response to economic crises or recessions. While there are some signs of weakness today, overall growth remains healthy. So, recent cuts represent something different: an attempt to normalize policy after the rapid tightening cycle that began in 2022. This is one reason the Fed is easing policy even while the economy remains in expansion and markets trade at all-time highs.

Perhaps the most important factor driving the Fed’s decision has been the deterioration in the job market. While the unemployment rate of 4.3% remains low by historical standards, the pace of job creation has slowed dramatically. August saw only 22,000 new payrolls added, well below the average of 123,000 from earlier in the year.

Even more striking are the payroll revisions suggesting that 911,000 fewer jobs were created over the twelve months through March than originally reported, as shown in the chart above. The Bureau of Labor Statistics revises the payroll numbers each year based on more accurate data than was available at the time of each monthly jobs report. While the numbers are still preliminary, a revision of this magnitude would represent the largest in history, showing that the job market has been weaker than originally believed.

Thus, the Fed is cutting rates because, according to the latest FOMC statement, it “judges that downside risks to employment have risen.” For investors, rate cuts typically provide support for both stocks and bonds if the economy remains strong.

Market volatility and policy uncertainty have eased for now

After significant volatility driven by tariffs and taxes earlier this year, measures of economic policy uncertainty have improved. The VIX index of stock market volatility is hovering around 16.3, below the long run average of 18, while the MOVE index of bond market volatility has declined to 78, below the average of 87.

As many long-term investors know, periods of market calm can change quickly. The last several years have experienced many episodes of heightened volatility due to inflation, trade wars, Washington policy, the Fed, recession fears, geopolitical conflicts, and more. The current government shutdown is but the latest event that could rattle markets in the short run, even if the long run effects are limited. Similarly, the outcome of tariff policies and the impact on inflation remain uncertain.

For investors, this uncertainty may feel uncomfortable, but it’s also what drives long-term portfolio outcomes. The last several years also highlight the difference between what investors feared and how markets actually performed. Rather than viewing uncertainty as something to avoid, successful long-term investors recognize it as a feature of markets that creates the opportunity to position portfolios for the years ahead.

The bottom line? As the final quarter of the year begins, markets are near all-time highs amid conflicting economic signals. This environment underscores the importance of maintaining an appropriate asset allocation and staying focused on financial goals.

 

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Monthly Market Update – August 2025

September 5, 2025

The stock market climbed to new all-time highs in August, while bonds also contributed positively to portfolios. This occurred despite continued uncertainty around tariffs, Fed independence, and technology stocks. The month began with U.S. tariffs going into effect against most major trading partners after the initial 90-day pause. A federal appeals court later ruled that the “reciprocal tariffs” are illegal, possibly paving the way for the case to reach the Supreme Court.

Markets also stumbled mid-month due to concerns that the Fed could keep rates higher for longer to fight inflation. Recent inflation reports, such as the Producer Price Index, suggest that companies are beginning to pass tariff costs through to consumers. However, market sentiment quickly rebounded due to better-than-expected corporate earnings and greater confidence that the Fed will cut policy rates at its upcoming September meeting.

Economic figures were mixed. GDP growth for the second quarter was revised higher from 3.0% to 3.3%, a strong improvement from the first quarter’s 0.5% decline. However, the jobs report published at the start of the month showed a significant decline in new payrolls, including large downward revisions to prior months. This led the White House to fire the Commissioner of the Bureau of Labor Statistics, adding to the uncertain environment.

Despite these challenges, market volatility remains low by historical standards. August’s solid performance across stocks and bonds underscores the importance for investors to stay balanced and focused on the long run.

Key Market and Economic Drivers

  • The S&P 500 rose 1.9% in August, the Dow Jones Industrial Average 3.2%, and the Nasdaq 1.6%. Year-to-date, the S&P 500 is up 9.8%, the Dow is up 7.1%, and the Nasdaq is up 11.1%.
  • The Bloomberg U.S. Aggregate Bond Index gained 1.2% in August. The 10-year Treasury yield ended the month lower at 4.2%.
  • International developed markets jumped 4.1% in U.S. dollar terms using the MSCI EAFE index, while emerging markets gained 1.2% based on the MSCI EM index. Year-to-date, the MSCI EAFE index has gained 20.4% and the MSCI EM index 17.0%.
  • The U.S. dollar index ended the month lower at 97.8.
  • Bitcoin fell in August, ending the month at 109,127 after experiencing a “flash crash” on August 24.
  • Gold prices ended the month at a new all-time high of $3,487.
  • The Consumer Price Index rose 2.7% on a year-over-year basis in July, in line with economist expectations.
  • The jobs report showed that the economy added only 73,000 jobs in July. Significant downward revisions to the May and June figures mean that the labor market was much weaker than originally reported. The unemployment rate remained low at 4.2%.

Markets climbed higher on healthy earnings

While day-to-day news and headlines can drive markets in the short run, fundamentals like earnings and valuations are what affect portfolio returns in the long run. Although stock market valuations are quite high by historical standards, this is supported by corporations that continue to grow earnings at a healthy pace.

The latest earnings season numbers show that 81% of S&P 500 companies have beaten estimates, according to FactSet. This is the highest percentage since the third quarter of 2023, demonstrating that the economy and corporate fundamentals have been stronger than many expected.1

This also underscores the adaptability of companies as they adjust to tariffs, absorb higher costs, and find ways to grow despite policy uncertainty.

Many investors are focused on the earnings and returns of the Magnificent 7, a group of mega-cap companies, including some with multi-trillion-dollar market capitalizations. This group now represents over one-third of the S&P 500, so their performance can have a major impact on the broader market. The earnings results were mixed for this group overall, but some of these “hyperscalers” did exceed expectations. Despite concerns about an “AI bubble,” these results helped to drive a market rally in the second half of August.

The Fed is expected to cut rates

In contrast, consumer-facing businesses reported mixed results due to changing household spending patterns. This is exacerbated by the implementation of tariffs, as companies pass on a greater proportion of tariff costs to consumers. Combined with the weaker-than-expected jobs data, markets began anticipating greater rate cuts beginning in September.

Fed Chair Jerome Powell, in a speech at their annual conference in Jackson Hole, Wyoming, provided the clearest signal yet that the central bank is prepared to resume cutting interest rates after pausing this year. The Fed has a “dual mandate” to keep inflation steady and unemployment low. Recently, they have kept interest rates relatively high due to stubborn inflation and a strong job market. Thus, early signs of job market softness could tip the Fed’s decision-making toward careful rate cuts.

Fed rate cuts can create opportunities across asset classes

The prospect of additional Fed rate cuts could create opportunities across asset classes. In addition to supporting broad economic growth, lower interest rates can improve borrowing costs for companies, reduce hurdles for new projects, and increase the present value of future cash flows. For bonds, lower interest rates boost the prices of existing bonds that were issued at higher yields.

Bond yields have hovered in a narrow range this year, with the 10-year Treasury yield generally fluctuating between 4.0% and 4.5%. Even if short-term yields decline as the Fed cuts rates, many bond sectors are providing healthy levels of income. The U.S. aggregate bond index is yielding 4.4%, investment-grade corporate bonds 4.9%, and high-yield bonds 6.7%. These levels are well above historical averages and support balanced portfolios.

For overall portfolios, investors should continue to focus on managing the different risk and return drivers. Topics such as tariffs, Fed policy, and the risk of a government shutdown in Washington are only some of the issues that investors will face in the months ahead. Rather than reacting to each event, holding a portfolio that can withstand these swings, while providing both income and long-term growth, is the best way to achieve financial goals.

The bottom line? Markets reached new all-time highs in August despite many policy concerns. Healthy earnings and economic growth continue to support portfolios despite ongoing uncertainty.

1.https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_082925.pdf

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Monthly Market Update – July 2025

August 7, 2025

The S&P 500 stock index reached ten new record highs in July. This strong performance was driven by good company earnings reports, solid economic data, and new trade agreements made before the tariff deadline. The index closed at record levels six days in a row during the second half of the month. For the year so far, the S&P 500 has gained 7.8%.

But market and economic uncertainty returned at the end of July. On July 31, the announcement of new tariff rates worried investors about higher prices for everyday goods. Also, the July jobs report showed that the job market has been much weaker over the past three months than we previously thought.

In this situation, it’s important for investors to stay calm as markets react to new trade news and economic information. The past few months remind us that things can change quickly in just a few weeks. Keeping a long-term view is still the best way to reach your financial goals.

Important Market and Economic Information

  • The S&P 500 went up 2.2% in July, the Dow Jones Industrial Average rose 0.1%, and the Nasdaq increased 3.7%. For the year so far, the S&P 500 is up 7.8%, the Dow is up 3.7%, and the Nasdaq is up 9.4%.
  • The Bloomberg U.S. Aggregate Bond Index (which tracks bond performance) fell 0.3% in July. The 10-year Treasury yield rose slightly to end the month at 4.38%.
  • International stocks had mixed results. The MSCI EAFE index (developed markets) fell 1.5% and the MSCI EM index (emerging markets) gained 1.7%.
  • GDP (the total value of goods and services produced) grew at a 3.0% annual rate in the second quarter. This was mainly due to changes in business investment and import activity because of tariffs.
  • The U.S. dollar index bounced back from 96.88 at the end of June to 99.97 at the end of July. It is still down significantly this year.
  • Bitcoin hit a record high of $120,198 in the middle of the month before ending July at $116,491.
  • The price of gold stayed strong but is below its recent peak, ending the month at $3,293.
  • Copper prices surged to record levels due to targeted tariffs, but then had its biggest single-day drop of 22%.
  • The Consumer Price Index (which measures inflation) rose 2.7% compared to the same time last year in June, matching what economists expected.
  • The economy added only 73,000 jobs in July. Big downward changes to the May and June numbers mean the economy was much weaker than originally reported. The unemployment rate stayed low at 4.2%.

Stock markets hit new record highs

The second quarter earnings season that started in July continues to show positive surprises, pushing markets higher. While many companies have reported some impact from tariffs, the effects have not been consistently bad. With over a third of S&P 500 companies reporting their earnings, 80% had better-than-expected earnings per share. The combined earnings growth rate is now 6.4% per year, which is lower than recent quarters but higher than what Wall Street analysts expected.1

Excitement about artificial intelligence helped several Magnificent 7 stocks. Both Microsoft and Meta reported better-than-expected earnings while making major investments in AI technology. As a result, Microsoft joined NVIDIA as the second company ever with a market value of over $4 trillion. Meanwhile, Tesla reported disappointing results for the second quarter, causing its stock price to fall.

While technology stocks have had ups and downs so far in 2025, the Information Technology sector is up over 13% for the year. Only the Industrials sector has done better with returns over 15% so far in 2025. Health Care and Consumer Discretionary stocks have performed poorly and are showing losses.

In the bond market, it was a relatively quiet month, with bonds falling slightly overall. The Federal Reserve (the central bank) kept interest rates steady between 4.25% and 4.50% for the fifth meeting in a row. They are balancing concerns about inflation due to tariffs with economic growth. However, for the first time since 1993, two Fed governors voted against this decision, preferring a quarter point cut. This follows ongoing public tension between President Trump and Fed Chair Powell as the White House continues to push the Fed to lower interest rates.

New data after the meeting showed that hiring slowed in July, with 73,000 jobs added during the month. Previous reports were revised downward, meaning there were 258,000 fewer jobs added in May and June than originally reported. The three-month average is now only 35,000 new jobs per month, far below the historic average. This suggests that the Fed may have to focus more on the employment part of its job, increasing the possibility of rate cuts, possibly starting in September.

Investors wait for new trade deals and tariff announcements

The White House announced several new trade deals throughout July, including with the European Union, Japan, and South Korea. Trade talks with China are still ongoing. These deals avoid the worst-case scenario that many investors feared in April, but many other countries are still facing potentially higher tariff rates as the deadline to negotiate expires. On July 31, President Trump issued an executive order with new tariff rates for many trading partners set to start on August 7 (the previous tariff deadline was August 1), as shown in the chart above.
As of July 23, the Yale Budget Lab estimates that consumers face an overall effective tariff rate of 20.2%, the highest since 1911. So far, it appears that companies have managed to absorb much of this extra cost rather than pass it on to consumers. Whether this continues depends on where tariffs ultimately end up and how companies manage to adapt.

The government passed major laws on taxes and cryptocurrencies

Bitcoin reached new highs in July as Congress considered new laws to regulate cryptocurrencies (digital currencies like Bitcoin). The perceived friendliness of the administration toward wider use of cryptocurrencies has resulted in gains for Bitcoin in 2025. Separately, the GENIUS Act, which has been signed into law, focuses on stablecoins which are often tied to the U.S. dollar.

On July 4, President Trump signed a comprehensive tax and spending bill that made many provisions from the Tax Cuts and Jobs Act permanent, including current tax rates and brackets. The bill provides more certainty to investors by maintaining the current low-tax environment, but also raises concerns about the sustainability of the growing national debt.

The Congressional Budget Office estimates the bill will add over $3 trillion to the national debt over the next decade. While there were spending cuts to major programs in the bill, they were more than offset by reductions to tax revenue.

The permanent nature of many of these tax changes removes uncertainty that has affected long-term financial planning, since many provisions from the TCJA were scheduled to expire this year. This could help support business investment and consumer spending in the near term.

The bottom line? The market reached many new highs during a busy month of tariff changes, a new tax bill, and earnings reports. As we head into August, trade deals and earnings will likely remain a focus for investors.

1.https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_072525.pdf


Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

Quarterly Market Update – June 2025

July 7, 2025

The second quarter of 2025 showcased both the resilience of financial markets and their sensitivity to policy uncertainty. From the White House’s tariff announcements in April to escalating tensions between Israel and Iran in June, investors faced many challenges. Yet, the stock market went on to stage one of the fastest rebounds in history and finished the quarter at new all-time highs.

Overall, it was a strong quarter for stocks, while bonds also delivered positive outcomes. For long-term investors, these events are a reminder that while headlines can drive short-term swings, maintaining perspective and staying focused on fundamental trends remains the key to achieving financial goals.

Key Market and Economic Drivers in Q2

  • The S&P 500 and the Nasdaq both ended the quarter at record highs, gaining 10.6% and 17.7% over the three months, respectively. The Dow Jones Industrial Average rose 5.0% and is 2% below its record level.
  • The Bloomberg U.S. Aggregate Bond Index gained 1.2% in the second quarter. The 10-year Treasury yield ended the quarter at 4.2% after reaching as high as 4.6% in May.
  • Developed market international stocks (MSCI EAFE) rose 10.6% and emerging market stocks (MSCI EM) increased 11.0% in the quarter.
  • Gold rallied to a new record level of $3,431 per ounce, before settling at $3,308 to end the quarter.
  • Bitcoin reached a high of $111,092 in May and hovered around $107,000 at the end of June.
  • The U.S. Dollar Index continued to fall over the quarter, ending the quarter at 96.88. It started the year at 108.49.
  • The Consumer Price Index rose 2.4% year-over-year in May, while core inflation, which excludes food and energy, came in at 2.8%.
  • The University of Michigan Consumer Sentiment Index improved in May to 60.7, its first increase in six months. Consumers expect an inflation rate of 5.0% over the next year, down from 6.6% in the previous survey.
  • At its June meeting, the Federal Reserve kept rates unchanged within a range of 4.25 to 4.5%.

Markets rebounded to new all-time highs

Despite significant volatility, the stock market recovered quickly once the worst-case scenarios for tariffs and geopolitical tensions did not materialize. The quarter began with heightened uncertainty following the announcement of new tariffs on April 2, which were more far-reaching than many investors had anticipated. However, as the administration engaged in negotiations and reached preliminary trade agreements with several partners, market sentiment improved. The Middle East conflict created a similar outcome, although markets were broadly resilient and went on to new highs after the ceasefire between Israel and Iran was announced.

The equity market rebound was widespread, with many sectors, styles, and regions delivering positive outcomes. International stocks continue to lead the way in 2025, especially with the dollar weakening. Small cap stocks have lagged other parts of the market due to their greater sensitivity to tariffs and domestic trends, and the Russell 2000 index is still down -2.5% this year.

At a sector level within the S&P 500, Information Technology stocks experienced a strong recovery and contributed toward the new market highs. Many other sectors are supporting markets too, including Industrials which are now up 11.4% on the year, Communications which have gained 10.2%, and Financials up 7.5%. On the other end, Healthcare and Energy saw weakness.

Bond markets are also quietly contributing to portfolio outcomes, with relatively strong yields and falling credit spreads contributing in the quarter. Treasury securities and corporate bonds also experienced volatility during the tariff-induced drawdown, although the quarter ended in positive territory.

The dollar continued to weaken

The U.S. dollar weakened through the second quarter despite tariff pressures. While a weaker dollar can be negative for consumers, it can be positive for U.S. businesses and exporters, since it becomes cheaper for those using foreign currencies to buy our goods. While the dollar has declined this year and is near the low end of its range since 2022, its value is still high compared to the past decade.

When it comes to monetary policy, the Federal Reserve held interest rates steady at 4.25% to 4.5% throughout the quarter, reflecting a measured approach to monetary policy in an evolving economic environment. Fed Chair Jerome Powell emphasized the Fed’s focus on price stability even as other factors complicate the economic outlook.

Specifically, the Fed’s updated economic projections reveal the challenges policymakers face. Officials now expect inflation to reach 3% in 2025 before moderating to 2.1% by 2027, marking an upward revision from earlier forecasts. They also expect real GDP growth to slow this year to 1.4%, a downgrade from a 1.7% projection in March. These adjustments reflect concerns that tariffs could spur inflation and slow growth.

The conflict between Israel and Iran added another layer of complexity to an already challenging environment. Israeli strikes on Iranian nuclear facilities and military targets beginning June 13 created immediate concerns about regional stability and potential escalation. However, the two countries agreed to a ceasefire after 12 days of fighting.

Bonds helped to provide portfolio balance

While the stock market has ended the quarter at new all-time highs, the decline and rebound was challenging for many investors. Fortunately, bonds helped to support balanced portfolios during the quarter. High yield, corporate, and Treasury bonds all provided balance and are positive year-to-date. Interest rates have remained higher than many had expected, and short-lived concerns in April about a flight from U.S. Treasury securities did not occur.

Budget discussions in Washington have brought renewed attention to America’s fiscal trajectory. The national debt now exceeds $36 trillion, or approximately $106,000 per American. According to the Congressional Budget Office, the latest budget proposal could add an estimated $3.3 trillion in deficits over the next decade. While the proposal includes spending reductions, these are outweighed by tax cuts and spending increases elsewhere.

Moody’s downgraded the U.S. credit rating in May, citing concerns about successive administrations and Congress failing to address “large annual fiscal deficits and growing interest costs.” This echoes similar challenges raised during previous budget standoffs in 2011, 2013, and from 2018 to 2019. However, in each instance, agreements were eventually reached, markets stabilized, and economic growth resumed.

For long-term investors, these fiscal debates underscore the importance of maintaining diversified portfolios that can weather various policy outcomes. While deficit levels deserve attention, history suggests that the U.S. economy’s fundamental strengths and adaptability remain intact.

The bottom line? The second quarter demonstrated both market volatility and resilience as investors navigated policy changes and global tensions. For investors, maintaining perspective and focusing on asset allocation strategies remain the most effective way to achieve long-term goals.

Monthly Market Update – May 2025

June 3, 2025

May was a strong month for financial markets, with the S&P 500 recovering its year-to-date losses amid new trade developments, a U.S. credit downgrade, and mixed economic data. While concerns around federal debt and consumer sentiment persisted, investor optimism returned as earnings came in better than expected and trade talks made progress. For long-term investors, May is a reminder that markets are capable of adapting quickly to changing policy and economic conditions.

Key Market and Economic Drivers

  • The S&P 500 gained 6.2% in May, the Dow rose 3.9%, and the Nasdaq surged 9.6%. Year-to-date, the S&P 500 is up 0.5%, the Dow is down 0.6%, and the Nasdaq is down 1.0%.
  • The Bloomberg U.S. Aggregate Bond Index fell 0.7% for the month but remains up 2.4% year-to-date. The 10-year Treasury yield ended May at 4.4%.
  • International stocks rose, with the MSCI EAFE and MSCI EM indexes both gaining 4.0% in May.
  • The U.S. dollar index declined to 99.3, a near three-year low, reflecting fiscal concerns.
  • Bitcoin hit an all-time high of $111,092 before ending May at $104,834.
  • Gold reached a record $3,422 before closing the month at $3,288, up 24% year-to-date.
  • Inflation moderated with the Consumer Price Index rising 2.3% year-over-year in April, the lowest increase since February 2021.
  • The U.S. economy added 177,000 jobs in April, while the unemployment rate remained low at 4.2%.

Markets continued to recover despite new concerns

After a volatile April, markets rebounded strongly in May, demonstrating once again how quickly sentiment can shift. As economic data stabilized and fears around trade and inflation moderated, investor confidence returned. This month’s performance reinforces the importance of maintaining a disciplined approach to investing—especially during periods of uncertainty.

Moody’s downgraded the U.S. credit rating

Moody’s downgraded the U.S. sovereign credit rating from Aaa to Aa1 in May, citing rising deficits and long-term fiscal challenges. The downgrade followed similar moves by Fitch in 2023 and S&P in 2011. As shown in the chart above, total U.S. debt rose to 122% of GDP, while net debt reached 97%.

Despite this headline, markets responded calmly. Many investors viewed the downgrade as overdue and largely symbolic. Treasurys remain a safe haven asset, and demand for U.S. debt continues amid global uncertainty. The muted reaction recalls the aftermath of the 2011 downgrade, which had little long-term market impact.

Coincidentally, the downgrade came just as the House passed a new tax and spending package, extending provisions from the 2017 Tax Cuts and Jobs Act. According to the Penn Wharton Budget Model, the bill could add $2.8 trillion to the deficit over the next decade. The legislation now heads to the Senate for debate and potential revision.

Trade negotiations show progress

Trade policy was another bright spot in May, with the U.S. reaching new agreements with the U.K. and China. The U.S.-China deal included a 90-day reduction in tariffs, helping to ease tensions. Negotiations with the EU also progressed, with a 50% tariff delay signaling diplomatic flexibility.

Nonetheless, challenges remain. Legal battles over the President’s tariff authority have introduced new uncertainty, and both the U.S. and China have accused one another of violating the current truce. Still, May’s developments show that diplomatic solutions are possible, even in a contentious environment.

As with many policy issues, trade takes time to unfold. Investors should avoid reacting too strongly to headlines and instead focus on long-term fundamentals. May’s rally suggests the worst-case trade outcomes may be avoidable.

Steady earnings growth supports market

Corporate earnings were another source of strength in May. According to FactSet, 64% of S&P 500 companies beat revenue expectations in the first quarter, with positive EPS surprises as well. Technology companies led the way, showing resilience despite trade and policy headwinds.

On the consumer front, sentiment remained subdued for much of the year. However, May saw a slight improvement in expectations. The University of Michigan’s survey reported stabilizing inflation forecasts and a modest rise in consumer confidence—potentially signaling alignment between economic reality and public perception.

The bottom line? May was a strong month across asset classes, reminding investors that markets often recover quickly from setbacks. With progress on trade, stable earnings, and muted responses to fiscal headlines, long-term investors are well-served by focusing on enduring trends—not short-term uncertainty.

Monthly Market Update – April 2025

May 2, 2025

April was one of the most volatile months in history as markets reacted to new tariff announcements. However, even though the S&P 500 fell as much as 12% during the month, the index rebounded and closed within one percent of where it started. Recent data also showed that the economy shrank slightly in the first quarter as companies stockpiled imported goods ahead of new tariffs. While bonds and international stocks were also volatile, they both contributed positively to diversified portfolios. This is yet another reminder of the importance of staying invested and diversified in times of uncertainty.

Key Market and Economic Drivers

  • The S&P 500 fell 0.8% in April, the Dow Jones Industrial Average fell 3.2%, and the Nasdaq rose 0.9%. Year-to-date, the S&P 500 has declined 5.3%, the Dow 4.4%, and the Nasdaq 9.7%.
  • The Bloomberg U.S. Aggregate Bond index gained 0.4% in April and is up 3.2% year-to-date. The 10-year Treasury yield ended the month at 4.16%, but was as low as 3.99% and as high as 4.49% over the month.
  • The U.S. dollar index fell 4.5% to end the month at 99.5, near a three-year low.
  • Bitcoin fell to $77,052 during the month, but ended at $94,581.
  • The Consumer Price Index rose 2.4% in March compared to the prior year, slower than expected and the lowest reading since last September.
  • Retail sales fell 0.9%, including a 1.9% decline in nonstore retail sales (i.e., online shopping). The household savings rate rose slightly to 4.6% but is still below the historical average of 6.2%.
  • The economy shrank slightly with GDP falling 0.3% in the first quarter, the first decline since Q1 2022. A significant increase in import activity drove this decline.

Lessons on staying invested after a volatile month

Once again, April demonstrated the importance of being prepared for market uncertainty. The month began with the White House’s April 2 tariff announcement on nearly all trading partners. These tariffs were far higher than investors had expected, leading to fears of rising inflation, a global economic slowdown, and a trade war. Stock markets reacted with the sharpest declines since the pandemic.

Stock market volatility jumped in April

The administration’s decision just days later to implement a 90-day pause for most countries helped fuel a market recovery. Additional exemptions on tariffs with China, including on technology products, further calmed investors’ nerves.

Despite significant swings throughout the month, major indices closed with only modest changes. Diversified portfolios also benefited from bond returns and a rally in international stocks. So, while the S&P 500 is down about 4.9% for the year with dividends, many balanced portfolios are closer to flat.

The accompanying chart shows that the VIX index, a key measure of market volatility, briefly crossed 50 for the first time since the pandemic. However, many of the largest declines during the month were followed by significant rebounds. This is a reminder that market swings can move in both directions, and trying to time these moves can often be counterproductive.

While markets have stabilized somewhat more recently, uncertainty remains and many of the drivers of April’s volatility will continue to be in focus. The situation around trade policy is still evolving, although the 90-day pause suggests that the worst-case scenarios may be less likely. Investors should expect that tariff headlines could continue to drive volatility in the near-term, even as markets adapt to the new trade landscape.

GDP declined in the first quarter

One of the key concerns among investors is whether tariffs will drive inflation higher and growth lower. The latest economic reports show that the economy shrank slightly in the first quarter, with GDP declining by 0.3% over the period, the first contraction since early 2022. This is due almost entirely to trade as businesses accelerated their imports to stockpile inventory. Consumer spending slowed but remained positive. It’s important to note that these figures are only the first estimate of GDP and are subject to change.

As the accompanying chart shows, consumer spending has been a key driver of economic growth in recent years. The latest surveys suggest that consumers expect a rapid acceleration in prices over both the coming year and in the longer run, resulting in historically low consumer confidence. While this has not yet impacted consumer spending or inflation in a significant way, it could be an important factor in the coming months.

The mixed picture on economic growth and inflation also makes the Fed’s job more difficult. Not only does the central bank face challenging interest rate decisions in the coming months, but its independence was briefly called into question by the White House, driving further market uncertainty. At the moment, markets expect the Fed to cut rates about four times this year, possibly beginning in July.

These events also resulted in unusual bond market swings, although they ended up near where they started. The 10-year Treasury yield ended the month at 4.16%, while corporate bonds saw yields edge higher. Some investors worried about a flight from U.S. assets, especially with the U.S. dollar falling to multi-year lows.

Staying invested has historically been rewarded

In the face of recent challenges, one investment principle remains clear: staying invested through periods of volatility has historically been an important path to long-term financial success. The accompanying chart demonstrates the potential cost of attempting to time the market every time a 2% decline (or worse) occurs. Since positive and negative days often occur at unpredictable times, exiting the market after negative days, even for a short period, can backfire. The temptation to time the market may be even greater in today’s market and economic environment.

While increased volatility can be unsettling, it’s in times like these that focusing on your financial plan, portfolio construction, and areas of opportunity is most important. Market volatility often results in attractive valuations across many asset classes, offering potential opportunities for those in search of greater diversification and balance in their portfolios. The S&P 500, for instance, has seen a significant improvement in its price-to-earnings ratio this year.

The bottom line? Market volatility in April is a reminder that short-term market swings can occur without notice. History repeatedly demonstrates that disciplined investors who focus on their long-term financial plans will be better positioned to achieve their goals.

Hello World – And Welcome to Circadia

May 2, 2025

At Circadia, May 1 marks more than just the official launch of the firm—it marks the beginning of a conversation we plan to carry forward with depth and intention.

The Rhythm & Wealth Blog was created to help you stay in sync with your financial life. Here, you’ll find practical insights on topics like goal and retirement planning, education funding, tax-smart strategies, and investment management. We’ll also share timely market updates and perspectives to help you cut through the noise and stay focused on what truly matters.

The name Rhythm & Wealth reflects our belief that financial decisions shouldn’t be reactive—they should flow with the cadence of your life. That means adapting your plan as your goals evolve, the markets shift, and new opportunities arise. When your financial strategy is aligned with your values and priorities, it’s easier to move forward with clarity and confidence.

This blog is designed to be a steady resource—whether you’re facing a big financial decision or simply want to stay informed. Our goal is to make complex topics accessible and actionable, so you can make progress one step at a time.

We’re excited you’re here. Check back regularly for updates, and if there’s a topic you’d like us to cover, don’t hesitate to reach out.

Here’s to finding your rhythm—and building lasting wealth along the way.

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