Rhythm & Wealth Blog

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Your Tax Return Has Something to Tell You About Next Year

April 15, 2026

You filed your taxes—or you’re about to. Either way, that return is more than a formality. It’s a snapshot of how well your paycheck withholding matched your actual tax liability last year. And right now, while the numbers are still fresh, is the best time to make sure next year goes more smoothly.

If you got a large refund, that money was yours all along—it just sat with the IRS for a few months instead of in your bank account. If you owed a big balance, you probably felt that. Neither outcome means you did something wrong. But both are signals worth paying attention to.

The mechanism behind all of this is your W-4—the form that tells your employer how much federal income tax to withhold from each paycheck. Most people fill it out when they start a new job and never think about it again. That’s understandable. It’s also why so many people are surprised every April.

What a W-4 adjustment actually looks like

Let’s say you’re a dual-income household. You’re paid biweekly, your spouse is paid semi-monthly, and your return showed a $4,800 refund. Nothing meaningful has changed—same filing status, same jobs, same number of dependents. You’d like to keep a small refund of around $1,200 and redirect the rest into your cash flow.

The difference is $3,600. Between the two of you, you have roughly 50 combined pay periods per year. That’s an extra $72 per paycheck, split however makes sense between your two W-4s—$36 added to each. Your monthly take-home increases by about $144, and by next April, your refund lands closer to $1,200 instead of $4,800.

Before Current W-4 $4,800 refund Sitting with the IRS all year After Adjusted W-4 $1,200 refund Small cushion, by design Adjust line 4(c) +$144 / month Back in your paychecks $4,800 − $1,200 = $3,600 redirected How it splits across two W-4s Your W-4 +$36 on line 4(c) · biweekly Spouse's W-4 +$36 on line 4(c) · semi-monthly ~50 combined pay periods per year · $72 total per pay period

That $144 per month can go toward the things you actually value—retirement contributions, a family vacation you’ve been putting off, paying down a student loan, or building up the cash reserve that lets you sleep at night. Those things benefit from consistency rather than a once-a-year lump sum.

The math works in the other direction, too. If you owed $1,800 at filing, that’s $75 per paycheck you were taking home but didn’t actually get to keep. Adding $75 in extra withholding per paycheck eliminates the surprise and smooths out your cash flow. No penalty. No scramble.

A word about the “interest-free loan” argument

You’ve probably heard someone say that a tax refund is just an interest-free loan to the government—and that’s technically accurate. But I don’t think that framing is particularly useful for most people.

The important thing isn’t whether you get a refund. It’s whether you understand why you’re getting one and whether the dollars are working for you either way.

What I’d encourage you to avoid is a refund so large that it’s effectively a budgeting blind spot—thousands of dollars that could have been deployed throughout the year toward things you care about, sitting idle instead.

The W-4 doesn’t work the way it used to

If you remember adjusting your withholding by adding or removing allowances, that system is gone. The IRS redesigned the W-4 in 2020, replacing allowances with a dollar-based approach. Instead of claiming a number of allowances that each reduced withholding by a fixed amount, the current form asks you to enter dollar figures for expected tax credits (Step 3), other income (Step 4a), deductions beyond the standard deduction (Step 4b), and any extra withholding you want per paycheck (Step 4c).

If your filing status, dependents, and income sources are already reflected accurately in those earlier steps, line 4(c) becomes your fine-tuning dial—the place to add a specific per-paycheck amount to hit a target refund or eliminate an underpayment. The examples above assume no other changes to filing status, dependents, other income, or deductions. If any of those shifted, you’ll want to update the relevant steps first, then use 4(c) to fine-tune from there.

How to make the change

Review your tax return Did anything change this year? Filing status · dependents · jobs · income sources Yes Use the IRS estimator irs.gov/w4app Update Steps 1 through 4(b) Then fine-tune with 4(c) No Go straight to line 4(c) Your fine-tuning dial Target refund ÷ pay periods = extra withholding per paycheck Submit new W-4 to employer

The IRS Tax Withholding Estimator walks you through it. You’ll need a recent pay stub and your most recent tax return. The estimator tells you what to enter on a new W-4, which you then submit to your employer’s HR or payroll department.

The earlier in the year you do this, the more evenly the adjustment spreads across your remaining paychecks. And if something significant changed in the past year—a marriage, a new child, a side hustle, a spouse changing jobs — start with the estimator rather than jumping straight to line 4(c). It will walk you through all the relevant steps so the full form reflects your current situation.

The bottom line

Your W-4 isn’t a set-it-and-forget-it form. It’s one of the simplest levers you have for making sure your paycheck reflects your actual tax situation. A few minutes with the IRS Tax Withholding Estimator and a new W-4 submission can mean the difference between a financial surprise in April and a plan that runs quietly all year.

If this is the kind of calibration you’d rather not do alone, it’s exactly the sort of thing we work through with clients as part of their ongoing financial plan.

Market Update – March 2026 – Geopolitics, Oil, and Market Pullbacks

April 9, 2026

The first quarter of 2026 illustrates the importance of preparation when it comes to financial planning and investing. After strong gains in 2025, markets have faced a combination of geopolitical shocks, higher oil prices, and renewed economic uncertainty. The conflict in Iran, which began at the end of February, became the dominant market story, pushing oil prices sharply higher and sparking the first market pullback of the year. However, by the end of March, headlines around a possible ceasefire emerged, and the situation continues to evolve.

Taking a broader perspective, markets have still performed exceptionally well over the past twelve months. Beneath the surface, many parts of the market have supported portfolios, including energy and defensive sectors. There will undoubtedly be new market questions in the coming months, including a change in leadership at the Federal Reserve and the midterm election later this year.

For long-term investors, the first quarter is a reminder that markets rarely move in a straight line, and that the principles of sound investing matter most when uncertainty is at its peak.

Key Market and Economic Drivers

  • The S&P 500 experienced a total return of -4.3% in Q1, the Nasdaq -7.0%, and the Dow Jones Industrial Average -3.2%.
  • The Bloomberg U.S. Aggregate Bond Index was flat for the first quarter of 2026. The 10-year Treasury yield ended the quarter at 4.3% after falling as low as 3.9% at the end of February.
  • Developed market international stocks (MSCI EAFE) were down -1.1% and emerging market stocks (MSCI EM) declined -0.1% over the quarter, both on a total return basis in U.S. dollar terms.
  • Oil prices spiked with Brent crude reaching $118 per barrel at the end of March after beginning the year under $61. WTI ended the quarter at $101 per barrel.
  • Gold ended the quarter at $4,668 per ounce after climbing as high as $5,417 in January. The U.S. Dollar Index (DXY) strengthened slightly to 99.96 over the same period.
  • February inflation showed headline CPI rising 2.4% year-over-year and core CPI climbing 2.5%. The core PCE price index, the Fed’s preferred measure, rose 3.1% year-over-year in January.
  • The Federal Reserve kept rates unchanged within a range of 3.50% to 3.75% at both meetings during the first quarter.

Markets experienced the first pullback of the year

It’s natural to draw parallels between the start of this year and the beginning of 2025, since both were driven by global concerns. Coincidentally, both first quarter periods experienced pullbacks for the S&P 500 of 4.3%. While last year’s volatility was the result of tariffs and this year’s is due to the conflict in the Middle East, the effect on investor sentiment has been similar. When uncertainty rises, it’s natural for markets to experience short-term swings in response to headlines.

The past is no guarantee of the future, but zooming out can help us understand how markets have behaved historically. Despite the challenges in the first quarter of 2025, the stock market experienced strong gains through the remainder of the year, including dozens of record highs across major indices. The point is not that markets always recover quickly, but that market conversations tend to focus only on negative news. So, when rebounds do occur, they often do so when investors least expect them.

Perhaps the most helpful perspective is to remember that pullbacks are a normal and unavoidable part of investing. Since 1980, the S&P 500 has experienced an average intra-year drawdown of around 15%, even though markets tend to experience positive returns in more than two-thirds of years. It’s natural for the average year to experience four or five pullbacks of five percent or worse. Last year saw six such pullbacks, even though the S&P 500 finished the year with an 18% total return.

For investors, the key takeaway is that short-term market swings, especially those driven by headline risk, are simply part of the market cycle. Portfolios aligned with long-term financial goals are designed exactly to navigate these periods. This could be especially important as we approach the midterm election and fiscal concerns reemerge later in the year.

Geopolitics and oil prices are the primary source of uncertainty

The most significant market development of the first quarter was the escalating conflict in the Middle East, which drove oil prices higher. Disruptions to the Strait of Hormuz, which carries roughly 20% of global oil from the Persian Gulf to the rest of the world, led to production cuts across major oil-producing nations in the region. Brent crude ended the quarter at $118 per barrel, up over 94% year-to-date, while WTI crude surpassed $100, the highest levels since the war in Ukraine began in 2022. Oil will continue to react to geopolitical headlines, including around a possible ceasefire.

Higher fuel costs directly affect consumers through the price of gasoline at the pump and indirectly raise the prices of goods and services across the economy. The average price of gasoline across the country reached $4 at the end of March, and diesel prices have jumped significantly as well.

While these types of events do affect consumer pocketbooks, economists tend to view these types of “supply-side shocks” as temporary when considering the health of the overall economy. This is because oil prices tend to improve once the geopolitical event has stabilized. This was the case in 2022 when gas prices reached $5 before declining within months. While not pleasant, significant financial hardship is not expected to be an issue for the average American household at current gasoline levels.

History also shows that geopolitical events, while creating short-term instability, have not typically derailed markets in the long run. This includes the U.S. operation in Venezuela in January, which surprised markets but had little lasting impact on investments. While the current situation is still evolving and the humanitarian consequences are significant, investors who made dramatic portfolio adjustments in response to past events often did so at the wrong moment.

Economic growth is slowing but remains positive

Volatile energy prices are just one piece of the broader economic puzzle. Other signs point to an economy that has cooled over the past year, but that is still fundamentally healthy. This is after many years during which investors and economists predicted recessions that did not materialize.

Perhaps the most closely watched area is the labor market, and the latest payrolls data show that February job gains fell by 92,000 and the unemployment rate edged up to 4.4%. Importantly, job seekers now outnumber job openings for the first time in years. As recently as 2022, there were two job openings for every unemployed individual, reflecting an exceptionally tight labor market. That relationship has now reversed.

However, the context around this matters. Fewer people are entering the workforce due to lower immigration and an aging population. In other words, both the supply and demand sides of the labor market are cooling, which has helped keep the unemployment rate near historically strong levels. Investors tend to watch jobs data closely because employment directly affects household income, consumer confidence, and spending. Consumer spending makes up more than two-thirds of GDP, and has been stronger than many expected over the past several quarters.

Sector performance has diverged

While the overall S&P 500 is experiencing a pullback, performance at the sector level has shown a wide degree of variation. In fact, six of the eleven S&P 500 sectors are positive for the year, and the difference between the best and worst performing sectors widened to nearly 50 percentage points in the first quarter.

The Energy sector has been the clear leader, gaining nearly 40% through the end of March, with higher oil prices expected to boost revenues and encourage further investment. Other sectors showing strength include Consumer Staples, Utilities, Materials, and Industrials, all of which have benefited from a more cautious market environment. Many of these sectors are often considered “defensive,” since they represent more stable businesses with steadier cash flows that are less dependent on the economic cycle.

In contrast, the Information Technology sector has declined approximately 9%, and many mega-cap stocks in the Magnificent 7 have underperformed. This is a shift from recent years when a small number of large technology companies drove the majority of market gains.

As always, it’s important to keep these moves in perspective. As the chart above shows, sector leadership can change based on market and economic conditions. Energy was the best performing sector in 2021 and 2022 when technology-related stocks struggled. This then reversed over the next three years. Just as with asset classes, it is extremely difficult to predict which sector will lead or lag in any given year, which is why a well-balanced portfolio is better positioned to weather different market environments.

The tariff story is evolving

Trade policy also took a turn at the end of January after the Supreme Court ruled 6-3 that the broad tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. The administration responded by imposing a temporary global import duty under a different law, Section 122 of the Trade Act of 1974. The administration also opened new Section 301 trade investigations in March, while about a dozen Section 232 investigations remain ongoing.

For investors, the main takeaway is that while the legal basis for tariffs has changed, the broader policy direction will continue. Tariffs will likely continue to impact the economy across consumer prices, business costs, and investor confidence. That said, last year showed that markets adapt to these types of policy changes over time. So, regardless of how the tariff story plays out later this year, the key is to stay invested and not overreact to policy moves.

The bottom line? The first quarter of 2026 challenges investors with geopolitical shocks, higher oil prices, and economic uncertainty. Yet markets have been resilient, with well-balanced portfolios and financial plans doing what they were designed to do. Investors should continue to focus on long run goals in the coming months.

Monthly Market Update – February 2026: Supreme Court Tariff Ruling, AI, and Iran

March 11, 2026

February is a reminder to investors that markets never move in a straight line. After January’s positive momentum carried major indices to new all-time highs, the mood shifted due to a landmark Supreme Court ruling on tariffs, concerns around artificial intelligence, softer labor market data, and major escalations in the Middle East. Meanwhile, international stocks and small caps continued to outperform, and bonds saw further gains, highlighting the importance of holding a balanced portfolio.

While headlines can create short-term volatility, the overall economy remains healthy and corporate earnings continue to grow. Rather than reacting to any single development, investors are best served by maintaining a diversified portfolio aligned with their financial goals.

Editor’s Note (March 11, 2026): Since this commentary was published, the conflict in Iran has escalated significantly, with the Strait of Hormuz effectively closed and oil prices surging above $100 per barrel. These post-month developments are summarized in a dedicated section at the end of this article.

Key Market and Economic Drivers in February

  • The S&P 500 fell -0.9% and the Nasdaq Composite dropped -3.4% for the month. Meanwhile, the Dow Jones Industrial Average rose 0.2%.
  • The CBOE VIX volatility index increased to 19.9 at the end of the month due to AI-related concerns and trade policy uncertainty.
  • International developed markets jumped 4.5% based on the MSCI EAFE Index in US dollar terms, while emerging markets gained 5.4% based on the MSCI EM Index. Year-to-date, they have gained 9.9% and 14.6%, respectively.
  • U.S. small cap stocks gained 0.7% based on the Russell 2000.
  • The 10-year Treasury yield ended the month lower at 3.95%. This is the first month it has fallen below 4% since last November. The Bloomberg Aggregate Bond Index rose 1.6%.
  • Gold closed lower at $5,279 per ounce but reached as low as $4,661 at the beginning of the month. Silver ended lower at $93.79 per ounce.
  • The U.S. dollar index rose slightly to 97.6.
  • January inflation showed headline CPI at 2.4% year-over-year and core CPI at 2.5%, while the core PCE price index rose 0.4% month-over-month, the sharpest increase in a year.
  • The unemployment rate edged down to 4.3% in January, with 130,000 nonfarm payroll jobs added. However, annual benchmark revisions showed the economy created only 181,000 jobs in all of 2025, roughly 15,000 per month.
  • On February 20, the Supreme Court ruled against the administration’s use of IEEPA-based reciprocal tariffs, prompting a pivot to alternative trade laws.
  • On February 28, the U.S. and Israel launched military strikes against Iran, including the compound of Iran’s Supreme Leader who has been reported killed.

A Supreme Court ruling reshapes trade policy

The most significant policy development in February was the Supreme Court’s ruling on February 20 against the administration’s tariffs. These were originally enacted based on the International Emergency Economic Powers Act (IEEPA) to impose reciprocal tariffs against most trading partners. The decision has broad implications, including potential refunds to businesses and consumers.

Following the ruling, the White House quickly adjusted tariffs based on another law, Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% for 150 days. These new import duties went into effect on February 24. The administration is also expected to pursue other measures, including Section 301 of the Trade Act of 1974 for unfair trade practices and Section 232 of the Trade Expansion Act of 1962 for national security-based restrictions.

For investors, the key takeaway is that while the legal framework for tariffs has shifted, the policy direction has not. Trade uncertainty will continue to generate headlines and contribute to market volatility. However, as history has shown, markets tend to adjust to new trade realities over time, especially as companies adapt their supply chains and pricing strategies.

The Treasury yield curve reflected some of this uncertainty, with the 10-year yield briefly falling below 4% for the first time since November. This dynamic helped fixed income portfolios in February and is a reminder of why bonds play an important role in balanced portfolios.

AI enthusiasm versus valuations

AI continued to dominate market conversations in February, but the narrative shifted from high valuations to a debate about the pace and degree of disruption on existing business models. Some investors worry that AI agents could compress software margins, accelerate white-collar displacement through automation, and disrupt traditional business models faster than expected.

These concerns have contributed to a notable market rotation. Investors have been diversifying away from mega-cap technology stocks and toward sectors perceived as harder to displace, including energy, materials, and industrials. This shift, sometimes described as a move toward “heavy assets, low obsolescence” (HALO) companies, helps explain why the Nasdaq underperformed while other parts of the market rallied.

While market volatility can be unpleasant, this is a healthy development for long-term investors who have been concerned about the rising level of stock market valuations.

Growth cooled while the labor market sent mixed signals

According to the Bureau of Economic Analysis, real GDP increased at an annual rate of 1.4% in the fourth quarter of 2025, down from 4.4% in the prior quarter and below market expectations of 2.5%. The slowdown was partly due to the record-long government shutdown and a deceleration in consumer spending. However, business investment grew 3.7% on an annualized basis, driven by record-setting investments in AI data centers. For all of 2025, real GDP grew 2.2%, which remains healthy by historical standards.

Perhaps more concerning is the state of the labor market. While the unemployment rate edged down to 4.3% in January, annual benchmark revisions from the Bureau of Labor Statistics painted a much weaker picture. The economy created only 181,000 jobs in 2025, translating to roughly 15,000 per month.

This has led some economists to describe the current environment as one of “jobless growth,” a situation where the economy expands but job creation fails to keep pace. The divergence between GDP growth and employment has been widening since mid-2022, and it raises questions about the underlying quality and breadth of the current expansion.

International stocks and small caps led the way

One of the most notable developments in February was the continued outperformance of asset classes beyond U.S. large-cap stocks. International developed markets rose nearly 5% for the month, while emerging markets gained over 5%. U.S. small caps posted their strongest monthly gain since August, with the Russell 2000 surging roughly 5% year-to-date, far outpacing the S&P 500.

This broadening of market returns is significant for diversified investors. After several years where only a small number of large U.S. technology companies drove the majority of market gains, the shift toward international stocks, small caps, and cyclical sectors suggests that investors are finding opportunities across a wider range of assets. A weaker dollar earlier in the year has also helped boost international returns when converted back to U.S. dollar terms.

Precious metals continued their strong run as well, with gold and silver gaining 6.8% and 8.1%, respectively. These gains reflect a combination of geopolitical uncertainty, central bank purchases, and concerns about fiscal deficits. While precious metals can play a role in diversified portfolios, their price swings in both directions serve as a reminder that they can experience significant volatility.

The end of February brought a major escalation in the U.S.-Iran conflict, with strikes across the Middle East and reports of the death of Iran’s Supreme Leader, Ali Khamenei. As discussed in the section below, this event has since had significant consequences for global energy markets.

Post-Month Update: Oil Prices and the Middle East Conflict

The following section summarizes developments that occurred after the close of February. For a full analysis, please read the companion Special Update: How $100 Oil and the Middle East Conflict Affect Investors.

The strikes at the end of February marked the beginning of a rapidly escalating conflict. Since then, the ongoing war in Iran and the effective closure of the Strait of Hormuz have pushed oil prices sharply higher. Both Brent crude and WTI have jumped from around $70 per barrel to approximately $100 in just a few days, approaching levels last seen in 2022 when Russia invaded Ukraine.

The Strait of Hormuz is a narrow waterway connecting the Persian Gulf to the rest of the world, through which roughly 20% of global oil shipments pass each year. While Iran cannot technically close the strait, attacks on tankers and safety concerns have been enough to halt traffic, with major shipping companies suspending bookings through the region. This has forced large Middle Eastern producers — including Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE — to cut production as storage facilities fill up. Unlike typical OPEC production cuts designed to boost prices, these are involuntary emergency measures, which is why prices have risen so sharply in such a short period.

For consumers, the most visible impact is at the gas pump, with prices rising back toward $3.50 per gallon nationally. More broadly, higher energy prices raise the cost of transporting goods, manufacturing products, and powering businesses — functioning as an effective tax on the economy. Economists refer to this dynamic as “cost-push inflation,” which is distinct from the demand-driven inflation of recent years. Because supply shocks of this kind tend to be viewed as transitory, their long-term impact on monetary policy may be more limited than current headlines suggest.

That said, the Fed’s path is less certain than it was. Market-based measures currently expect at least one rate cut this year — in September — and possibly two by year-end. If the oil supply disruption persists longer than anticipated, the Fed may need to keep rates higher than currently expected.

From a market perspective, the energy sector has gained approximately 25% year-to-date and leads all sectors, while the broader commodities asset class has risen over 20%, driven by energy and precious metals. The S&P 500 is down only a couple of percentage points year-to-date despite the uncertainty. History offers important context here: oil prices surged to nearly $128 per barrel when Russia invaded Ukraine in 2022, and in each prior energy shock, prices eventually stabilized as supply and demand adjusted. Properly constructed, diversified portfolios are designed precisely to handle these kinds of risks, and making dramatic changes in response to headlines has historically been counterproductive.

The bottom line? February’s U.S. stock market performance was offset by strength in international markets, small caps, and bonds. While AI and trade policy uncertainty will continue to generate headlines, the broadening of market leadership is a positive development for long-term investors. Since month-end, the escalation of the Iran conflict and the resulting surge in oil prices have introduced new near-term uncertainty — but history suggests that staying diversified and focused on long-term financial goals remains the right approach.

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Monthly Market Update – January 2026 & The Recent Tech Rotation

February 9, 2026

The start of the year was positive for stocks and bonds, continuing the rally from recent years. This might be surprising to some investors since there were several periods of volatility driven by geopolitics and Federal Reserve policy. While headlines created short-term swings, including the S&P 500’s worst day since last October, markets rebounded quickly. Within days, major indices reached new all-time highs, driven also by healthy corporate earnings that have supported portfolios.

For long-term investors, January serves as a valuable reminder that headlines can move markets in unpredictable ways, but fundamentals and long-term planning are what matter most. While geopolitical events and policy uncertainty will likely create more volatility throughout 2026, the best way to navigate these challenges remains a balanced portfolio aligned with your long-term financial plan.

Key Market and Economic Drivers in January

  • The S&P 500 gained 1.4% in January and briefly crossed 7,000 for the first time on an intra-day basis. The Nasdaq Composite rose 0.9% and the Dow Jones Industrial Average gained 1.7%.
  • The CBOE VIX volatility index ended the month at 17.44 after rising above 20 due to geopolitical tensions.
  • The Bloomberg U.S. Aggregate Bond Index climbed 0.1% over the month as long-term interest rates rose. The 10-year Treasury yield ended the month at 4.24%, the highest level since last September.
  • International developed markets jumped 5.2% in U.S. dollar terms based on the MSCI EAFE Index, while emerging markets gained 8.8% based on the MSCI EM Index.
  • President Trump announced the nomination of Kevin Warsh as the next Fed Chair. If confirmed by the Senate, he would take office in mid-May.
  • Gold surged to a record close of $5,417 per ounce before plunging nearly 10% on January 30.
  • Similarly, silver closed as high as $116.70 before tumbling to finish the month at $85.20.
  • The U.S. dollar index fell further to about 97.0, reaching its weakest level in nearly four years, before rebounding slightly following the Fed Chair news.
  • The Federal Reserve held its policy rate at 3.50 to 3.75% at its January meeting, following three consecutive quarter-point cuts in the second half of 2025.
  • Consumer Price Index inflation remained at 2.7% year-over-year in December, still above the Fed’s 2% target. The Producer Price Index accelerated to 3.0%.
  • Washington ended the month with a partial government shutdown.
  • Severe winter weather across much of the Eastern and Southern United States caused natural gas and electricity prices to spike.

Geopolitical tensions edged market volatility higher 

Early in the month, a U.S. operation in Venezuela resulted in the capture of Nicolás Maduro. While the operation centered around narco-terrorism, much of the conversation quickly turned to oil. Venezuela holds the world’s largest proven oil reserves but pumps less than 1% of global crude production due to its poor infrastructure. For investors, the primary channel through which geopolitical events affect financial markets is through commodity prices, and oil remains central to the global economy.

Geopolitical concerns rose further over U.S. statements regarding the purchase of Greenland due to its strategic importance to defense and commodities. This sparked diplomatic disputes with NATO countries involving tariffs that led to the S&P 500’s worst day since last October. However, the situation quickly de-escalated after President Trump met with the NATO secretary general and established a “framework of a future deal,” leading the market to rebound.

For long-term investors, geopolitical events may drive short-term uncertainty but history shows that the effects on markets and the economy are often overstated. Markets have typically recovered as the initial shock passes. Investors should avoid over-reacting to headlines and instead maintain a long-term focus on financial goals.

Fed concerns affected gold, silver, and the dollar

Precious metals continued to rally until a significant reversal on the final day of January. Gold rose to nearly $5,600 on an intra-day basis while silver’s spot price exceeded $120 per ounce before they both sold off. These moves have been driven by a combination of factors including geopolitical risk, central bank purchases, and concerns about Federal Reserve independence.

The moves driving gold and silver have been referred to as the “debasement trade,” or the idea that fiscal and monetary policies that effectively weaken the dollar, create deficits, and lead to inflation may strengthen precious metals. Fed uncertainty, including whether a new Fed chair might push interest rates lower, has driven these metals higher.

However, on January 30, President Trump announced his intention to nominate Kevin Warsh as the next Fed Chair once Jerome Powell’s term is up in mid-May. Warsh is a former Fed governor who has recently stated that he prefers lower interest rates. However, he has also been hawkish in the past, meaning he has advocated for keeping rates higher to prevent inflation. For investors, this shifted expectations since it suggests there may be a smoother transition between Fed Chairs. This led to a plunge in both gold and silver, with the dollar rising slightly.

This reversal underscores both that precious metals are prone to boom-and-bust cycles, and demonstrates how quickly markets can shift based on policy expectations. While precious metals can serve investors, their volatility during January demonstrates why they need to complement, rather than replace, core holdings in stocks and bonds.

Corporate earnings remained healthy despite uncertainty

Beyond the main global headlines, the fourth quarter earnings showed that companies continue to perform well. According to FactSet, 33% of S&P 500 companies have reported results and 75% have beaten expectations. If these trends continue, large public companies could be on track to achieve a growth rate of 11.9% for the quarter, representing the 5th consecutive quarter of double-digit earnings growth. On a trailing 12-month basis, earnings growth has accelerated to 12.8% according to consensus estimates.

Naturally, many investors are focused on AI and technology earnings since these stocks have contributed to market returns over the past several years. So far, markets have had mixed reactions to the earnings of these companies, even when they beat estimates, due to lofty expectations and questions around the sustainability of this spending. At the same time, many other sectors have benefited from broad economic growth and have grown their earnings at a faster rate as well.

For long-term investors, the underlying message from earnings season is positive. Corporate profitability remains strong across many sectors, supporting stock valuations. This fundamental strength is one reason major indices remained positive for the month despite considerable volatility.

Severe weather affected much of the country

January’s severe winter weather, dubbed Winter Storm Fern, affected at least 21 states and more than half the U.S. population. The storm forced state emergency declarations and created disruptions to economic activity, including power outages and thousands of flight cancellations.

While the safety of those affected by the storm is the top priority, history shows that weather-related disruptions such as hurricanes and blizzards have little long-term effect on the national economy. The key distinction is whether these events affect productive capacity such as factories, equipment, and businesses, or whether they simply postpone activity. In this case, temporary disruptions to sectors such as retail and construction just shift economic activity forward.

Looking Forward: AI Disruption and Tech Rotation

While broader indices remained resilient in January, the technology sector has recently faced a more complex narrative driven by advancements in AI. Specifically, the AI company Anthropic recently unveiled new capabilities that have impacted the stock prices of companies providing these services. This development highlights a recurring theme in technological revolutions: we often overestimate their impact in the short run while underestimating them in the long run.

Despite the excitement, technical improvements in AI have slowed somewhat over the past year, and the development of “artificial general intelligence” has not yet fully materialized. While AI is expected to eventually boost productivity and corporate profitability across the economy, there is currently limited hard evidence of widespread productivity improvements.

This lag has prompted a healthy rotation in the markets. As expectations for immediate AI returns are recalibrated, the Information Technology sector has lagged while other sectors—such as Energy, Consumer Staples, and Industrials—have performed well. For investors, this rotation serves as a real-time demonstration of the value of diversification: when one high-flying area of the market faces a correction, other sectors can provide essential balance to a portfolio.

The bottom line? January experienced market volatility due to geopolitics, the Fed, and more. However, markets were resilient and healthy corporate earnings have helped major indices reach new all-time highs, even as precious metals stumbled.

While specific sectors like technology will continue to experience periods of volatility, they remain a component of a well-balanced strategy designed to withstand short-term noise in favor of long-term growth.

For long-term investors, this underscores the importance of maintaining a proper asset allocation that is aligned to financial goals.

Copyright © 2026 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 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 – 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
https://www.eia.gov/outlooks/steo/tables/pdf/3dtab.pdf

Copyright © 2026 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 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 © 2026 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 [www.clearnomics.com](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 © 2026 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 [www.clearnomics.com](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 © 2026 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 [www.clearnomics.com](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.

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

Copyright © 2026 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 [www.clearnomics.com](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.

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

Copyright © 2026 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 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.

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