July Market Review

The US
equity markets continued to march higher in July, fueled by a trifecta of
earnings resilience, optimism around trade negotiations and the passage of
President Donald Trump’s “One Big Beautiful Bill.” The S&P 500 has notched
15 record highs in 2025 – setting 10 new records in July alone – but tariff
headwinds loom.

“Although
the S&P 500 has climbed to new highs, we think investors may be too
complacent about the risks given that tariffs are likely to be seven times
higher than they were at the start of the year,” Raymond James Chief Investment
Officer Larry Adam said.

Strong
earnings results, led by mega-sized companies, reflect a corporate America that
is faring better than expected: So far, 82% of companies that have reported are
beating their earnings estimates in the second quarter – the highest level
since the second quarter of 2021.

The US
economy continues to show signs of resilience, with only a modest cooling in
the labor market, ongoing consumer strength and minimal pass-through of tariffs
to the end consumer. Federal Reserve (Fed) officials have preached patience,
opting to hold rates steady at the target range of 4.25%-4.5% at their July
29-30 Federal Open Market Committee (FOMC) meeting. While most members of the
FOMC expect tariff-related price increases to emerge later this year, there is
some debate on whether they represent a one-time price increase or a persistent
threat.

Treasury
yields climbed nearly 20 basis points across the curve as solid economic data
and concerns about tariff-related price pressures drove the market to push back
expectations for Fed rate cuts this year.

The passage
of the “One Big Beautiful Bill” marked the major milestone in July, impacting
US fiscal and energy policy. It permanently extended key provisions of the 2017
Tax Cuts and Jobs Act, including individual tax rates, 100% bonus depreciation,
domestic R&D expensing and expanded interest deductions. However, several
other tax breaks, such as the deduction for tips and overtime, are set to
expire in 2028-2029.

“Crypto
Week” was another notable development last month, with Congress passing laws
intended to bring clarity, structure and legitimacy to the US digital asset
market.

The
bottom line

While US
equities continue to set new highs, supported by strong earnings and policy
momentum, signs of market fatigue and elevated expectations suggest that
caution may be warranted. Changing sector dynamics and tariff-related
uncertainties highlight the importance of staying diversified and not
overreacting to short-term market shifts.

Pendle Hill
Advisors is proud to contribute to the Montgomery County News with our weekly
curated financial news and topics. If you have any questions about the markets,
your financial plan, or anything, please feel free to reach out to our office
for a no cost initial consultation.

Kent Pendleton, AAMS®

Financial Advisor, RJFS

Pendle Hill Advisors LLC

14375 Liberty St, Ste 109 | Montgomery,
TX 77356

T 936-297-8267

Kent.Pendleton@raymondjames.com | www.raymondjames.com/pendlehilladvisors

Material
created by Raymond James for use by its advisors. Securities offered
through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment
advisory services are offered through Raymond James Financial Services
Advisors, Inc. Pendle Hill Advisors is not registered broker dealers and is
independent of Raymond James Financial Services.

Investing
involves risk, and investors may incur a profit or a loss. All expressions of
opinion reflect the judgment of the Raymond James Chief Investment Officer and
are subject to change. There is no assurance the trends mentioned will continue
or that the forecasts discussed will be realized. Past performance may not be
indicative of future results. Economic and market conditions are subject to
change. Diversification does not guarantee a profit nor protect against loss.