Market Movers & Shakers

August delivered another month of gains for U.S. stocks. The S&P 500 closed higher by 1.91%, notching its fourth consecutive monthly advance while the Nasdaq advanced 1.58%, marking five straight months of gains. Market breadth improved in August, with the equal-weight S&P 500 slightly outperforming the market cap-weighted index. Two-thirds of stocks in the S&P 500 were trading above their 200-day moving average at month end, up from just over 50% at the start of the month. Fed rate-cut expectations provided an outsized tailwind to small cap stocks, helping the Russell 2000 notch a 7.00% gain for its strongest monthly performance since November 2024. Factor-wise, growth and momentum lagged while value outperformed.

From a sector standpoint, Materials, Health Care, and Communication Services were the largest outperformers, while Utilities, Industrials, and most notably, Information Technology, underperformed the broader index. Nvidia’s earnings release last week was the main focus for the sector, and arguably the market’s, given just how large the company has become. The chipmaker faced high expectations heading into its second-quarter results and managed to beat estimates while also raising its guidance. However, the size of the guidance increase was somewhat underwhelming. Of note, datacenter revenue came in a bit below expectations for the first time since the release of ChatGPT in 2022. However, reported figures did not include any H20 China contribution, nor did Q3 guidance. Elsewhere, The Information reported that Deepseek AI reportedly selected Huawei chips to use in training certain models.



Source: Bloomberg

Equity volatility was quite subdued in August, with the VIX touching a year-to-date low last week. The ICE U.S. Dollar Index (DXY) was weaker against most major currency crosses last month, declining 2.2%. Gold prices rose by 5.0% last month and finished above $3,500 an ounce for the first time ever, while silver continued to rally to the highest level in nearly 15 years. Now that Labor Day is in the rearview mirror, we step into one of the more difficult seasonal periods for markets. Historically, September has been the most challenging month for stock returns.



Source: AlmanacTrader, Hirsch Holdings, Inc.

The yield on the U.S. 2-Year Treasury Note fell by 32 basis points last month, driven by rising expectations for Fed rate cuts. A weaker-than-expected nonfarm payrolls report early in the month coupled with Fed Chair Jerome Powell’s dovish Jackson Hole speech bolstered the market’s expectations for interest rate cuts this year and next. Fed Governor Waller, who appears to be the clear front runner to take over as Fed Chair, argued that the case for rate cuts has grown stronger now amid increased downside risks to the labor market. In a recent speech, Waller continued to suggest that tariffs should only have a temporary impact on inflation and that monetary policy should look through any one-time price increases. Markets are now fully pricing in two cuts by year-end, followed by another three to four cuts in 2026, which would take the Fed Funds Rate below 3.0%.

On the macroeconomic front, July core PCE increased 0.3% month-over-month, in-line with expectations, taking annualized core PCE up to 2.9% year-over-year from June’s 2.8%. July’s increase in core PCE marks the fourth straight monthly rise and to its highest level since January. Heading into the print, economists had raised their PCE forecasts following the hotter July CPI and PPI data. Turning to growth, the second read on Q2 GDP was better than expected at 3.3% quarter-over-quarter versus forecasts for 3.2% and the first read of 3.0%. The upward revision was driven by a decline in imports and an increase in consumer spending. Last week’s initial jobless claims came in mostly in-line at 229,000 compared to estimates of 228,000 while the prior week saw a slight downward revision. The four-week moving average of initial claims increased 2,500 from the prior week to 228,500. Continuing claims—the number of people who remain unemployed and are still receiving unemployment benefits after their initial claim—came in at 1.954 million, below consensus estimates though still hovering near a four-year high. Finally, housing data has been receiving heightened attention recently as the slowdown drags on. Several participants from the Fed’s July meeting noted a weakening in housing demand. July pending home sales posted a surprise decline month-over-month, falling 0.4% versus expectations for a 0.5% increase. At the same time, the median sales price of a new home slipped 0.8% month-over-month to $403,800.



Source: U.S. Census Bureau, U.S. Department of Housing and Urban Development via FRED®

Updates & News*

Earnings season has come to an end, but not before providing us with numerous opportunities to deploy cash in new accounts and existing accounts with recent inflows. Transition speeds have accelerated ever so slightly since our last edition of Notes was released at the beginning of August. After a week of Tandem’s management, new money in our manager traded accounts is just over 35% of the way in-line with our strategies. That figure rises to roughly 55% after one month of management and surpasses 70% just after the three-month mark.

Turning to portfolio news, Amphenol recently announced a $1 billion acquisition of Trexon, funded with cash on hand. Headquartered in Boston, Trexon is a leading provider of high-reliability interconnect and cable assemblies primarily for the defense market. Amphenol anticipates the deal to close in Q4 2025 and expects the acquisition to be accretive to earnings per share in the first year. Elsewhere, Terreno Realty, an acquirer, owner and operator of industrial real estate in six major coastal U.S. markets, recently announced a 6.1% increase to its quarterly dividend.

Source: Source of all data is FactSet, unless otherwise noted.

*The transition level activity taken by Tandem is applicable to new manager-traded accounts and new money in manager-traded accounts, not the composite or firm-wide level. New manager-traded accounts and new money in manager-traded accounts are not automatically invested on the first day. Rather, they are transitioned into our strategy over a longer time period that is dependent upon market conditions, this process differs from Tandem’s model-provided strategies, where money is invested on the day the account opens. Strategy level activity is applicable to the composite and action is taken at the firm-wide level.

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