The Confident Chronicles: August 1st, 2025
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Summary of July 2025 Performance
July was a strong month for the S&P 500, which rose approximately +2.84% on a price‑only basis MarketWatch. This gain followed robust results from Q2 earnings, particularly among big tech firms like Meta and Microsoft, fueling investor enthusiasm around artificial intelligence and tech innovation Reuters.
The index hit multiple record highs during the month: it closed at a historic 6,389.77 on July 28, with an intraday peak of 6,409.26 on July 29 Wikipedia. For context, July closed significantly above the June 1 level of ~6,029.95, illustrating solid upward momentum Multpl+1Cinco Días+1.
Earnings season was strong: nearly 80% of S&P 500 companies beat EPS estimates, and 80% topped revenue forecasts—both above long‑run averages. However, aggregate beats were modest: earnings came in around +6.1% above estimates (below the 5‑year average of 9.1%), while revenues beat by +2.3% (above the 5‑year average) FactSet Insight. Forward P/E stood near 22.4, slightly above recent norms.
Seasonally, July tends to be positive—with a 1.4% average gain over the past 35 years, ranking as the third‑strongest month historically—and has consistently closed higher over the past nine Julys StoneX.
Key Drivers Behind the Move
1. Tech / AI Earnings: Meta and Microsoft hit record sales and profits, reinforcing AI optimism across the market Reuters.
2. Corporate Resilience: Strong EPS and revenue beats during Q2 lifted sentiment broadly FactSet Insight.
3. Trade and Policy Developments: Reduced escalation in trade tensions with the EU and stabilizing tariff policies eased investor fears Wikipedia+5MarketWatch+5Business Insider+5.
4. Federal Reserve Stance: While the Fed held rates steady on July 30, it flagged that a rate cut was unlikely before September, which tempered rate‑cut dreams yet didn’t derail equity optimism MarketWatch+3AP News+3Reuters+3.
Still, some strategists warned of stretched valuations: the S&P 500 at ~22× forward earnings suggests the market is “priced for perfection,” raising caution about potential pullbacks Barron's.
What to Expect in August 2025
Looking ahead to August, the outlook is mixed:
BNP Paribas raised its year‑end S&P 500 target to 6,700, noting government fiscal stimulus and a likely Fed pivot later in the year—but they also expect a potential Q3 correction, particularly in August and September MarketWatch+1Reuters+1.
Morgan Stanley forecasts a long‑term gain, with the index potentially reaching 7,200 by mid‑2026, albeit after a short near‑term pullback typical of late summer seasonality Reuters+2Business Insider+2MarketWatch+2.
Bank of America cautions that August is historically prone to volatility and suggests a “W‑hedge” strategy: trimming low‑volatility positions and buying cheap options that pay off in sharp swings either way Omni Ekonomi.
Classic summer doldrums and weaker seasonality in August have often sparked turbulence in equity markets. As valuations remain elevated, the risk of a short-term correction can't be ignored.
Strategic Recommendations for Clients
Maintain Diversification: Emphasize defensive sectors or cash buffers in case of a summer dip.
Watch Fed Signals: Track upcoming GDP, inflation, and Fed commentary—especially the likelihood of rate cuts into late Q3.
Keep Focus on Fundamentals: Continued strength in corporate earnings—particularly in tech and industrials—may support further gains if trade and rate risks remain controlled MarketWatch+9MarketWatch+9MarketWatch+9Reuters.
Summary at a Glance
Conclusion
July 2025 delivered a compelling story of resilient earnings, tech-led rallies, and record-high levels for the S&P 500. Yet, elevated valuations, the seasonal softness of August, and trade/policy uncertainties argue for disciplined caution. Investors and advisers alike should weigh hedging strategies, profit-taking, and rebalancing to navigate potential short-term volatility—while remaining positioned to benefit from a possible rebound later in the year.
PLAN CONFIDENCE MODEL UPDATES:
FUTURE CONTRIBUTIONS:
Future contributions are monies that are added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that we hope to be “on sale” for the next 30 days.
If we are correct, this will allow you to buy more shares in your portfolio.
This month we are advising that you use the following:
· (Bonds) Emerging Markets Bond
· (Stocks) Diversified Emerging Markets
· (Stocks) Large Value
“Future Contributions” are an optional feature in Plan Confidence, and you may or may not receive this advice.
Please discuss this with your advisor if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - STRATEGIC MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is commonly known as a “rebalance”.
Our “Strategic Models” combine the benefits of asset allocation and “buy and hold” strategies.
These models rebalance quarterly back to their risk “targets” and remain fully invested through all market cycles.
Our Strategic Models rebalance the first trading day of every quarter.
Strategic Models – LAST UPDATED 07/01/2025
Please talk to your adviser if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
CURRENT ALLOCATIONS - TACTICAL MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is known as a “rebalance”.
Some plans have trading restrictions on how often you can rebalance the money in your plan. Be sure to know your plan’s restrictions before implementing any tactical strategies.
Our “Tactical Models” combine the benefits of asset allocation and “momentum investing” strategies. These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash than the Strategic Models.
Our Tactical Models may rebalance on any given day.
Please be sure to look for an email from support@planconfidence.com letting you know when to make changes.
Tactical Models LAST UPDATED 07/01/2025
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
Please talk to your adviser if you have any questions.
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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