“The real key to making in stocks is not to get scared out of them” – Peter Lynch
July was a relatively uneventful month for the US stock market, with the major indexes down slightly for the month. The exception was the S&P 500, which was up a little more than half a percent. The Bloomberg Aggregate Bond Index continued its steady ascent, rising another 0.57% in July. The dollar index rose by more than 2%, which we consider a short-term countermove to the downtrend. The commodity Index was down less than ½ percent, but with extreme inter-month volatility related to tariffs. Specifically, Copper started July at $5.05, hit a mid-month high of $5.93, and ended the month at $4.40.
All data as of 08/04/2025, Source: Wells Fargo Investment Institute. An index is not managed and not available for direct investment. Past performance is not a guarantee of future results. [Wells Fargo Investment Institute, Inc. is a registered investment advisor and wholly-owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.]
Welcome to the dog days of summer—a time when market momentum slows and investor attention drifts. Over the years, we’ve observed a consistent trend: regardless of whether markets are climbing or correcting, most clients aren’t closely tuned in this time of year. And understandably so. August brings a whirlwind of activity—family vacations, back-to-school prep, international travel, and everything in between.
But while the average investor may be checked out, we’re fully dialed in. As summer winds down, we’re keeping a close eye on the markets and the signals that matter. Before diving into our main topic, let’s take a moment to highlight the three areas we’re watching most closely as we head into August.
The S&P 500 (Chart #1), according to our analysis, is positive with the 50 Day Moving Average above the 200 Day Moving Average and both moving higher. On the earnings front, second-quarter reports have been good for most reporting companies.
Chart #1: www.stockcharts.com Data 11/10/2024 – 08/01/2025 as of 08/04/2025. An index is not managed and not available for direct investment. MA 13 = 13-week moving average MA 40= 40-week
Next up is the Reuters/Jefferies CRB Index (Chart #2), which presents a more nuanced picture than just the headline number would indicate. This index tracks a broad basket of commodities, with its composition weighted as follows: 41% agriculture, 39% energy, 13% industrial metals, and 7% precious metals. Because of this diverse mix, the overall index performance can sometimes mask the divergent trends occurring within its individual components.
In July, for example, the index was fairly benign, down just 0.68% for the month. Copper, however, was on a much different ride. Over the 22 trading days in July, it reached a high of $5.93, bottomed at $4.40, and had both a day with a 10%+ gain and a day with a devaluation of 10%.
Chart #2: www.stockcharts.com Data 01/10/2022 – 08/01/2025 as of 08/04/2025. An index is not managed and not available for direct investment. MA 13 = 13-week moving average MA 40= 40-week
The final chart we have is of the US Dollar Index (Chart #3), which shows the persistent weakness of the dollar vs. a basket of foreign currencies this year. Historically, the dollar’s value has trended over multiple years. In our opinion, the break below the 100 level earlier this year was that moment of change. If we are correct, portfolio positioning will need to change. We went deeper into this topic in our June commentary.
Chart #3: www.stockcharts.com Data 10/14/2024 – 07/01/2025 as of 07/01/2025. An index is not managed and not available for direct investment. MA 13 = 13-week moving average MA 40= 40-week
The Stock Market Can Go Up, Even If You Don’t Understand Why
With sweeping changes in government policy, shifting global trade dynamics, and new tariffs reshaping supply chains, many of the investors we work with were expecting significant market disruption. Havoc might be a better word to describe it. Yet, despite the noise and the S&P 500 correcting almost 20% earlier this year, the stock market has continued its upward trajectory. Even seasoned observers have been left scratching their heads. It’s a reminder that markets are complex ecosystems, often driven more by expectations, liquidity, and long-term outlooks than by immediate headlines.
It is important to remember one of Peter Lynch’s most notable quotes: “The real key to making money in stocks is not to get scared out of them.” While it’s natural to feel uneasy when market volatility is in the headlines, markets can—and often do—rise in the face of uncertainty. We continue to remind our clients that discipline and focus on the long-term fundamentals are key to successful investing, even when things feel horrible and the short-term narrative sounds anything but bullish.
Let’s Go One Step Further: What if We Are Investing In the 1990s?
While it may not be immediately apparent to the passive market observer, the current investment landscape shares some striking – some would say surprising – similarities with one of the longest and most powerful bull markets in history. By 1993, the U.S. economy had emerged from the early-decade recession, but uncertainty persisted for investors. In Europe, there were conflicts in the former Yugoslavia, the First Intifada was happening in the Middle East, and the Taiwan Strait Crisis (1995-1996) saw rising tensions with China. Fiscal policy shifts in the 1990s were about reducing the federal deficits through legislation that managed spending and increased taxes.
The similarities don’t end with geopolitics, however, but include growth trends that weren’t recognizable in real-time back in the early to mid-1990s that drove massive societal advances as well as the back half of the bull market of 1982 – 2000. They include:
Technological transformation: In the 1990s, the big innovation was the PC, and the internet revolution reshaped productivity, business models, and investors’ expectations. Today, the game-changing technology is Artificial Intelligence (AI). Secondly, clean energy continues to expand and lower operating costs.
Infrastructure Buildout: In the 1990s, there was a massive buildout of the telecom infrastructure to accommodate the commercialization of the internet and the mobile technology we take for granted in 2025. Currently, we are at what looks like the start of a trillion-dollar buildout of power grids to support the AI infrastructure, a reformulation of global supply chains, and a continued build of climate technology.
Interest Rates and Inflation Dynamics: Thirty years ago, the inflation rate hovered around 2.5-3.0% with the Fed Funds rate in the 5-6% range (4.5-5% today) and positive real yields around 2%. Coming off a long period of benign inflation and interest rates just above 0% it is easy to forget what policy looks like in more normal times.
Final Thoughts
While every era presents its own set of uncertainties, history reminds us that innovation and resilience often outpace fear. Just as investors in the 1990s navigated geopolitical tensions, rate hikes, and valuation concerns—only to witness one of the most powerful bull markets in history—today’s environment offers similar promise. The rise of artificial intelligence, the reshoring of supply chains, and the modernization of infrastructure are not just headlines; they’re catalysts for long-term growth. The parallels are striking, and they suggest that the current cycle may be less about caution and more about conviction.
It’s easy to find reasons to sit on the sidelines—whether it’s inflation, elections, or global unrest. But successful investing has always been about identifying opportunity amid uncertainty. At Magellan Financial, we believe the better question isn’t “What could go wrong?” but “What could go right?” By staying focused on fundamentals, embracing innovation, and maintaining a disciplined strategy, investors can position themselves to benefit from the next chapter of growth. The 1990s rewarded those who leaned in. We believe today will, too.
If you would like to discuss your current strategy, or how to build such a strategy, Contact Our Team Of Financial Advisors Today!
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Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
Asset allocation and diversification are investment methods used to help manage risk. They do not guarantee investment returns or eliminate risk of loss including in a declining market. All investing involves risks including the possible loss of principal invested. Past performance is not a guarantee of future results.
Index returns are not fund returns. An index is unmanaged and not available for investment.
Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted index of 30 “blue-chip” industrial U.S. stocks.
S&P 500 Index: The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock’s weight in the Index proportionate to its market value.
S&P Midcap 400 Index: The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between the S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
S&P Small-Cap 600 Index: The S&P SmallCap 600 Index consists of 600 domestic stocks chosen for market size, liquidity (bid-asked spread, ownership, share turnover and number of no trade days) and industry group representation. It is a market value-weighted index (stock price times the number of shares outstanding), with each stock’s weight in the index proportionate to its market value.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI.
MSCI World Index: The MSCI World Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance.
MSCI EAFE® Index: The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
The CRB (Commodity Research Bureau) Index measures the overall direction of commodity sectors. The CRB was designed to isolate and reveal the directional movement of prices in overall commodities trades.
Bloomberg Barclays U.S. Aggregate Bond Index: Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market.
NASDAQ Composite Index: The NASDAQ Composite Index measures the market value of all domestic and foreign common stocks, representing a wide array of more than 5,000 companies, listed on the NASDAQ Stock Market.
Russell 2000® Index: The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents.
U.S. Dollar Index (USDX) measures the value of the U.S. dollar relative to majority of its most significant trading partners. The index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.
Technical analysis is only one form of analysis. Investors should also consider the merits of Fundamental and Quantitative analysis when making investment decision. Technical analysis is based on the study of historical price movements and past trend patterns. There is no assurance that these movements or trends can or will be duplicated in the future.
Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility.
Investments in fixed-income securities are subject to market, interest rate, credit and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the bond’s price. Credit risk is the risk that the issuer will default on payments of interest and/or principal. The risk is heightened in lower rate bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.
Investing in commodities is not suitable for all investors. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. The prices of various commodities may fluctuate based on numerous factors including changes in supply and demand relationships, weather and acts of nature, agricultural conditions, international trade conditions, fiscal monetary and exchange control programs, domestic and foreign political and economic events and policies, and changes in interest rates or sectors affecting a particular industry or commodity. Products that invest in commodities may employ more complex strategies which may expose investors to additional risks, including futures roll yield risk.
Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo Bank, N.A. a bank affiliate of Wells Fargo & Company.
Robert I. Cahill, Partner
Rob.Cahill@wfafinet.com
Jonathan D. Soden, Managing Partner
Jon.Soden@wfafinet.com
Cassandra Queen, CFP®,ChFC®, Senior Wealth Planner Cassandra.Queen@wfafinet.com
Susan C Schupp, MBA, Senior Wealth Planner
Susan.Shupp@wfafinet.com