WEEKLY MARKET RECAP – AUGUST 1, 2025

A Friday sell-off ended a turbulent week for U.S. stocks, with major indexes posting losses between 2% and 3%. The S&P 500 and NASDAQ pulled back from all-time highs amid a flurry of developments around tariffs, employment, GDP, corporate earnings, and Federal Reserve policy.

Markets declined on Friday after a disappointing jobs report revealed that U.S. job growth in July fell short of expectations, with just 73,000 new positions added. In addition, previous estimates for May and June were sharply revised downward by a combined 258,000, bringing those monthly totals to just 19,000 and 14,000, respectively.

Trade tensions also remained in focus as a U.S. deadline for tariff negotiations triggered a wave of last-minute deals. The European Union and South Korea reached full or partial agreements with the U.S., while Canada, India, and Brazil failed to reach terms. Talks continued with key partners such as China and Mexico.

As anticipated, the Federal Reserve opted to hold interest rates steady for a fifth straight meeting. However, two officials dissented in favor of a 0.25% rate cut, and markets reacted negatively after Chair Jerome Powell suggested a cut at the Fed’s mid-September meeting was not guaranteed.

Meanwhile, the U.S. economy showed signs of resilience, with second-quarter GDP growing at an annualized 3.0%—a rebound after a slight contraction in Q1. The recent GDP uptick was influenced by reduced imports, as businesses slowed purchases of foreign goods following an earlier rush to beat higher tariffs.

Despite the week’s decline, U.S. stock indexes notched a third consecutive monthly gain. The S&P 500 rose 2.2% in August and recorded 10 new closing highs. Tech stocks continued to lead the way, with the information technology sector logging a cumulative 28% gain over the past three months.

Corporate earnings also offered bright spots. With over two-thirds of S&P 500 companies having reported Q2 results, average earnings growth expectations climbed to 10.3%, up from around 5.0% before the season began, according to FactSet.

Investor anxiety jumped in response to the jobs data, pushing the Cboe Volatility Index (VIX) up nearly 22% on Friday alone and 37% for the week, its highest level in over six weeks.