Hello everybody-
Bottom Line up Front: I am 50% S-Fund, 50% C-Fund. The I-Fund flashed some energy but I am not so sure I want to be in international stocks right now, tariff impact is still an “unknown” on international companies. The S&P 500 has hit a new high, on July 31, attaining 6427. The next level to “break through” is 6430.
As we know, new highs are a sign of strength. Indeed not every day has been sunshine and roses, we have seen some big down days in the market.
With that said, inflation data seems to indicate we are close to the FOMC desired 2% level. Will we ever perfectly attain 2.0, as in two point zero percent, perfectly? I don’t know. But inflation is down-trending and some believe a rate cut is in the cards sometime this year. See CPI Chart:
Market Highlights
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In the week ending Friday, August 8, 2025, the S&P 500 rose about +0.8%, almost matching its recent record high. The Nasdaq jumped about +1%, making yet another all-time high.
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It was the best weekly performance since late June for the S&P 500, and the Nasdaq surged nearly +3.9%—again breaking records.
Price action matters:
When the market pushes beyond previous highs or breaks through resistance, it often signals strength. Recently, the Nasdaq’s new peaks and the S&P 500 closing near its highest levels suggest that buying power is strong and momentum remains intact.
Watch for ‘distribution’ days:
Some days show higher volume selling from large investors even when prices don’t drop sharply. These “distribution” days can be early signs of caution. While sharp sell-offs haven’t appeared yet, it’s worth watching volume closely after rallies.
KEY MARKET STATS
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S&P 500 weekly change: +0.8% (Week ending Aug 8, 2025)
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Nasdaq weekly change: +3.9% (Week ending Aug 8, 2025)
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S&P 500 status: Near record high
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Nasdaq status: New all-time highs
Economic Outlook
Inflation data ahead
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Tuesday, August 12, 2025: Consumer Price Index (CPI) release for July
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Thursday, August 14, 2025: Producer Price Index (PPI) release for July
Spotlight on stagflation worries
Some economists warn about “stagflation-lite”—a period of slow growth with rising prices. The services-sector price index recently hit a high while growth slowed.
When the Fed meets next
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Tuesday–Wednesday, September 16–17, 2025: Federal Reserve policy meeting
The Fed left rates unchanged in July but signaled the possibility of a rate cut later this year. Markets currently expect a high probability of a cut in September.
UPCOMING ECONOMIC EVENTS…
Next two weeks will have important events and reports impacting the markets:
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Aug 12, 2025: CPI inflation report
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Aug 14, 2025: PPI inflation report
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Aug 15, 2025: University of Michigan Consumer Sentiment (Preliminary August)
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Aug 21–23, 2025: Jackson Hole Federal Reserve conference
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Sep 16–17, 2025: Federal Reserve policy meeting
International & Small-Cap Moves
Small-to-mid-sized U.S. companies (S-Fund) have rallied strongly in the second quarter thanks to easing inflation and expectations for lower rates.
International stocks (I-Fund) are up about +11.8% year-to-date through July 31, 2025, boosted by a softer dollar and stronger economic performance in Europe, Japan, and the U.K.
YTD PERFORMANCE SNAPSHOT
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C-Fund: Strong gains, near record levels
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S-Fund: Solid rebound in Q2
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I-Fund: +11.8% YTD through July 31, 2025
What’s Coming Soon
Key geopolitical and trade dates:
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Aug 14, 2025: Scheduled expiration of U.S.–China tariff truce unless extended
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Aug 20, 2025: Planned meeting between U.S. and Russian leaders
Federal Retirement Benefits and Pending Legislation
Proposals in Washington could impact federal retirement benefits.
Proposals underway:
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End of annuity supplement for many FERS retirees before Social Security eligibility, except for certain special categories.
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Change from “High-3” to “High-5” salary average for pension calculations, which would lower benefits for many.
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New fees and audits: MSPB appeal fees and tighter verification of dependent eligibility for FEHB health benefits.
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Legislative timeline: House passed its budget resolution on March 4, 2025. Senate negotiations are ongoing; final votes could occur in September or October 2025.
FEDERAL BENEFITS PROPOSALS AT A GLANCE
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Annuity supplement may end for most retirees
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“High-3” could become “High-5”
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New MSPB appeal fees
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Stricter FEHB dependent checks
Why it matters
These proposals could lower pension payouts or affect retirement plans, especially for those considering early retirement.
In Summary
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C-Fund: Large U.S. companies remain strong and near record highs.
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S-Fund: Small-to-mid caps rebounding with momentum.
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I-Fund: Outperforming U.S. markets YTD.
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Economy: Inflation reports on Aug 12 and Aug 14, Fed conference Aug 21–23, next Fed policy meeting Sep 16–17.
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Federal benefits: Potential changes could impact supplements, pension formulas, and health coverage rules, with final decisions possible in fall 2025.
Again, I am 50% C-Fund and 50% S-Fund. In the near future, keep an eye out for 6430 on the S&P 500, and potential interest rate cuts.
Thank you for reading, please share with anyone who may benefit from this analysis…thank you !
-Bill Pritchard
