Rise Advisors Market Update July 2025
Rise Advisors Market Update
July 30, 2025
Transcript Below
Hi everybody, this is Zach Harrington, partner and Chief Investment Officer at Rise Advisors. And on behalf of all of us here at Rise Advisors, I want to take a moment to thank you for watching our July market update for what is July of 2025. In this version of our market update, our goal is to talk through just a lot of the happenings and positive signs that we're seeing throughout equity markets; as well as address just kind of where we see things going over the next kind of months to finish up the year here in 2025.
When we get to the agenda and what we're going to cover. So, we're going to talk about just some of the kind of cyclical rotations we've seen out of the S&P 500. We're going to talk through some really interesting charts that show kind of really good rotation in and out of certain industries within the broad markets themselves. We're going to talk through some pretty interesting comments out of Jerome Powell in early July that kind of acknowledged what we all have been saying for a while. We're going to beat the dead horse that is the fact that M2 money supply and the inflation measures kind of run hand in hand. And then we'll go through some of those summaries of what things look like moving forward.
So getting to kind of just the massive kind of recovery we've seen to set repeated record highs here in July of 2025. We have this chart here that I think really does an amazing job of illustrating not only the unprecedented volatility we've seen over the last 12 months in the S&P 500, but also really importantly the relative performance of each industry of the S&P 500 since the lows in April. And so what's really important to keep in mind is we had that really dramatic sell off that began April 2nd through April 9th, but we also had a pretty steady sell off beginning in mid-February.
So in mid-February of 2025, US equity markets kind of hit a peak. And then as some of the concerns over the AI trade as well as tariffs began to dwindle, the markets sold off dramatically through April 9th when Trump put a pause on the tariffs for 90 days. What has happened since those lows of April is really important and a really great sign for the bull market that was reestablished throughout the month of April. So when we look at from an industry standpoint of what performed really well from mid-February to mid-April when the market sold off, it was the defensive names. It is your consumer staples, it's your utilities, it's energy names, it's healthcare. Really conservative industries that tend to be kind of an inflation and recession proof. People need healthcare, people need utilities, they need consumer staples. As markets began to get clarity around the tariff expectations and levels coming forward, the market rebound dramatically. And some of those more growth or cyclical names or industries really have taken off and dominated.
It's no surprise that technology industrials and financials are three of the leading sectors. Technology in the AI boom is driving a lot of positive market sentiment. The industrial names have to help build out all of the infrastructure need for those tech aspirations, and then somebody's got to pay for it and finance it. So the financial sector performing quite well, it all makes sense and adds up. And with that being said, it's full steam ahead and it seems like the bulls are back in town.
So in the month of July, this is a really interesting chart that basically shows if you took basically the first half of the year and you took the Russell 1000 index, kind of an index of most of the US equity names. In the first portion of July, these first two weeks, basically the names that were the best performing 20, 50 and 100 names of the Russell 1000 or some of the worst performing names in July and some of the most beat up names in the first half of the year were the best performing names so far in July. That's a really important sign that validates the chart we showed previously. Investors are moving out of the names that performed well to start the year and rotating back into some of those more cyclical, higher growth industries as they expect the tariff noise to kind of settle out. And then also they kind of expect and anticipate the tech trade and industrials and financials that keep pushing ahead.
Couple of other interesting things, so this is a cool chart that goes all the way back basically a hundred years. And what it looks at is the S&P 500 and a period in time where over a one-year period you basically had a super concentrated market where there wasn't much breadth. It was just a certain number of companies that were participating in the upside to a point in which more than 80% of the sub industries are performing well. Right now We've had a widening out of market breadth. It's not just the tech names and Magnificent Seven that are supporting markets higher. It's a lot of participation across a lot of broad sectors. It's a really great sign of a really healthy stock market. What's important to look at is if you look at after a period of time or after these instances where we've had this kind of blowout participation broadly, the average 12-month return of the S&P 500 in all of those instances is an additional 14.3%. So we've had this 25% recovery off of the April lows, we have a widening out of market to participation and history would tell us that the party's not over. And on average it's an additional 14% of upside so really great sign for equity investors.
On the flip side, talking about the bond market a little bit, we have talked about this ad nauseum for the better part of 12- to-18-months, which is that we think Jerome Powell has been getting it wrong. He's been a little bit too slow to act, a little bit too conservative in like their fear of stagflation. And he finally said it like he finally said, what we've all anticipated and no, which is that he's so worried about a stagflationary environment, specifically when it comes to tariffs, that he would have cut rates at least once, if not multiple times in 2025, given the labor market data, given how good inflation has been. But they're really scared about the tariff piece, which is where, in my opinion, I think that we're going to see a little bit of bargaining between the Trump administration and the Fed. It's really hard for the Fed to step in and cut interest rates when on any given day there's a new 50% tariff on copper or there's a new 40% tariff on X,Y, Z. I think over the next few weeks the market's going to gain clarity towards early August around what these tariff levels look like moving forward. And then from there, the Fed can put into action a couple of rate cuts here to end of year and everybody wins.
We remain steadfast though that tariffs don't necessarily have to be inflationary. Yes, the levels that were quoted on Liberation Day certainly would be a supply chain shock and some issues that could be inflationary. But what we've seen so far at the levels basically post the tariff pause, that kind of 10% flat tax, inflation's been really well under control, both in the CPI and the wholesale indexes. We still tend to think that M2 money supply or money and circulation leads inflation expectations. So, here's a great chart that basically looks at the last 15 years and what you'll see is M2 money supply tends to be a leading indicator of inflation. As M2 money supply expands beyond normal bounds, so does inflation and inflation has come down as M2 money supply has come down.
So we remain pretty committed that, you know, looking ahead, we expect the Fed to cut rates 25 basis points in September. We expect two to three rate cuts this year, and we expect to have a Fed Fund rate somewhere between three and a quarter and three and a half to start 2026. That's going to be really positive for that bottom half of consumers as cost of capital around things like car loans and mortgages and all of those things becomes a little bit more palatable.
We also think that the combination of AI deregulation from the Trump administration and now clarity around tax law with the Big Beautiful Bill should all be tailwinds for US equities for the back half of the year. As rates come down, we expect consumer sentiment to continue to grow. We expect energy to recover as some of these recession fears go away. And this week we've seen a lot of financials, financial companies like Goldman Sachs, JP Morgan report really blowout earnings, as to be expected. And one of the things they keep touting is investment banking activity. It's really important to keep in mind that as consumer sentiment increases, as interest rates come down and overall expectations of the economy are remain positive, we're going to see deals activity, we're going to see mergers and acquisitions, we're going to see IPOs and a lot of the financial specific sectors that you own are going to perform really, really well here in the back half of the year.
We also expect that the AI build out and infrastructure piece are going to be great for industrials. So most of our clients are overweight industrials. They're overweight financials. We expect both of those sectors to perform really well, but there is a sector we're keeping an eye on. If we go back to the chart I showed you of kind of relative performance off of the April lows, the healthcare sector as a whole has really struggled. There's a ton of uncertainty and insecurity around tariffs on pharmaceuticals. There's a ton of concerns over what's going to happen from a deregulation standpoint when it comes to the health insurers. We still remain bullish long term on the healthcare sector, but it's certainly something we're keeping an eye on here in July of 2025. So with that being said, we remain overall pretty optimistic here for US equities and broad markets as a whole, and we'll see what comes when we do the August update.
As always, thank you for taking the time to watch the video here in July. I hope you have a great rest of your summer and we'll see you here soon enough. Feel free to reach out with any questions. And on behalf of all of us here at Rise Advisors, we hope you have a great rest of your day. Thank you.
Sources:
1.https://dualityresearch.substack.com/
2.Bespoke Investment Group - Russell 1000 analytics review July 2025
3.https://sentimentrader.com/ Sub-cyclical rotation instances
4.https://www.cnbc.com/2025/07/01/powell-confirms-that-the-fed-would-have-cut-by- now-were-it-not-for-tariffs.html
5.https://www.longtermtrends.net/m2-money-supply-vs-inflation/
This presentation is for Informational purposes only.
All investment strategies including rebalancing and diversified asset allocation have risk. Past performance of our investment approach, component holdings and methods does not guarantee future results. Advisory services offered through Rise Advisors, LLC ("Rise") Registered Investment Advisor. While all data is believed to be from reliable sources, accuracy and completeness are not guaranteed.