Trade policy has dominated the start of the year, with stock markets moving lower, then higher, primarily a function of tariff developments. While stocks have rallied off April lows as policy overhang has abated, the full economic implications of current policy remain unclear. Positive earnings and share buyback announcements have helped underpin investor sentiment, though stock market concentration remains a concern, underscoring the importance of portfolio diversification. Bond yields have trended lower on the back of moderating economic growth expectations and an increased likelihood of Fed rate cuts.
Q3 Market Update (August 2025)
The full economic impact of tariffs remains uncertain, though it is expected to result in a short-term moderation in economic growth and an increase in inflation. 2025 GDP growth is expected to grow 1.5%, down from expectations of over 2% earlier in the year, but improved recently as some policy uncertainty has subsided. The labor market appears to be moderating, which may put downward pressure on consumer spending. On the other hand, increased adoption of artificial intelligence (AI) bodes well for productivity.
Inflation is expected to rise through the end of 2025 before declining in 2026, though it is expected to remain above the Fed’s 2% target. With this backdrop, we believe the Fed will pay greater attention to its employment mandate and is likely to begin cutting rates in the face of a slowing labor market, albeit at a measured pace.
We are positive on the long-term outlook for stocks, though we anticipate some moderation in returns relative to recent strength. International stocks trade at a discount to the U.S. market and may be supported by fiscal and monetary policies. Current bond yields are relatively attractive, with many of our preferred bond funds yielding mid- to high-single digits. Moving forward, we believe alternative strategies may offer attractive risk-adjusted return potential.
To learn more, please review our Quarterly Market Perspectives.
Managing Your Investments at Mission Wealth
In a shifting market environment, your portfolio strategy matters more than ever. Our Wealth Advisors can help you navigate today’s challenges, uncover opportunities, and build a plan for long-term success as we progress through 2025 and shift our focus to year-end planning. Maintaining a globally diversified, tax-efficient portfolio aligned with your long-term goals remains essential.
To explore how we can support your financial journey, connect with our team and schedule a complimentary consultation today.
Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
Mission Wealth is a Registered Investment Advisor. All rights reserved. ALL INFORMATION HEREIN HAS BEEN PREPARED SOLELY FOR INFORMATIONAL PURPOSES. 00780602 08/25
