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John Hancock: Weekly Market Recap Week Ended August 1

August 5, 2025

Fed holds steady

As expected, the U.S. Federal Reserve held off on cutting interest rates for its fifth consecutive policy meeting, although two Fed members dissented by voting for an immediate cut of a quarter percentage point. Stocks slipped following the meeting after Chair Jerome Powell said that a potential rate cut at the Fed’s mid-September meeting was far from guaranteed.

 

GDP reversal

U.S. GDP expanded at a 3.0% annual rate in this year’s second quarter, marking a positive turnaround after GDP slightly contracted in the previous quarter. Both quarters’ figures were skewed by rising tariffs; the latest quarter’s GDP was boosted by a decline in imports as U.S. businesses cut back on foreign-made goods after previously rushing to stock up on those products ahead of higher tariffs.

 

Jobs miss

Stock prices and bond yields dropped on Friday after an employment report fell short of expectations and showed that previous months’ jobs growth was much slower than had been initially estimated. The economy generated 73,000 new jobs in July and initial estimates for the previous two months’ gains were revised downward by a combined 258,000. As a result, totals for April and May were just 19,000 and 14,000, respectively.

 

Earnings upgrade

More than two-thirds of the way through earnings season, the latest batch of reports prompted analysts to lift their overall expectations again. As of Friday, second-quarter earnings for S&P 500 companies were expected to rise an average of 10.3%, based on reports already released and forecasts for companies that haven’t yet reported, according to FactSet. Entering earnings season, the projected earnings growth rate was around 5.0%.

 

SOURCE: https://www.jhinvestments.com/weekly-market-recap#market-moving-news

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