S&P 500 Weekly Update for August 4-8, 2025

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Market Update Summary (July 28 - August 1, 2025)
Market Performance:
The markets experienced a downturn, with the S&P 500 down 2.36%, the Dow down 2.9%, NASDAQ down 2.2%, and small caps hit hardest at 4.2%.
Volume was above average, contrasting with below-average volume in July when markets were hitting new highs.
The S&P 500 and NASDAQ set new all-time highs earlier in the week, but the 6,400 level for the S&P posed resistance.
Key Influences:
Employment Report: A weaker-than-expected report (73,000 jobs vs. higher expectations) and downward revisions of prior months sparked growth concerns.
Tariffs and Trade: New tariffs on Brazil, Canada, India, and Taiwan, along with an EU-US trade agreement, raised concerns about corporate margins and global trade dynamics.
Earnings: Mixed results with strong earnings from Microsoft and Meta, but disappointing outlooks from Amazon and Apple led to selling pressure.
Federal Reserve: No rate changes on Wednesday, but softer economic data (especially the jobs report) increased expectations for a September rate cut (over 80% probability for a 25-basis point cut).
Interest Rates: The 10-year yield dropped to 4.22%, reflecting a flight to safety amid economic uncertainty.
Technical Indicators:
Short-term trend turned negative as the market fell below the 20-period moving average.
Negative divergences appeared across multiple indicators, signaling potential weakness.
The VIX rose above 20, indicating increased market fear.
Defensive sectors (utilities, staples, healthcare) outperformed, while growth sectors (tech, discretionary) led declines.
Economic Context:
GDP growth was stronger than expected at 3%, but employment data raised doubts about economic strength.
Inflation remains stable but above the Fed’s 2% target, with no significant upward pressure.
Manufacturing (ISM) showed a disconnect, declining while the S&P rose, highlighting a services-driven economy.
Sector and Asset Performance:
Utilities and staples led sectors, reflecting a defensive shift. Tech and discretionary weakened.
Copper dropped significantly (-23.65%) due to tariff concerns, while oil performed better.
Bonds rallied, with prices rising and yields falling. Gold remained flat, and the dollar weakened to the 98 range.
Sentiment and Valuation:
Sentiment dropped sharply (from 75 to 50), reflecting growing caution.
The S&P 500 P/E ratio is high at 22, with tech, discretionary, and industrials above 20, indicating expensive valuations.
Earnings reports showed 82% of S&P companies beating estimates, with net profit margins above 12% for the fifth straight quarter.
Seasonal and Historical Context:
August is historically weak, up only 40% of the time over the last five years with a -0.5% return.
Post-election years often see August weakness, with negative seasonality potentially extending into October.
Outlook (August 4-8, 2025):
Markets face potential continued weakness due to seasonal trends, softening economic data, and tariff impacts.
Defensive sectors may continue to outperform if growth concerns persist, with rate cut expectations shaping market dynamics.

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DISCLAIMER This video is for entertainment purposes only. I am not a financial adviser, and you should do your own research and go through your own thought process before investing in a position. Trading is risky!