August 22, 2025
WEEKLY TOUCHPOINT
This week, we take a closer look at interest rates, expectations from the Federal Reserve, and what history tells us about market performance when rates start to decline. The effective federal funds rate—the overnight lending rate between banks—hit 4.33% in July. According to the Fed’s own Summary of Economic Projections, policymakers expect that number to trend lower over the coming years, with a median estimate of 3.40% by the end of 2027.
Why does this matter for investors? Because history shows that rate cuts often act as a tailwind for stocks. Looking back to 1957, the S&P 500 has averaged a 9.7% return in the 12 months following the start of a Fed rate-cutting cycle, though the range of outcomes is wide. While nothing is guaranteed, the data reminds us that monetary policy shifts often create opportunities—and risks—that shape portfolio outcomes.
NEWS
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Fed dissenters appeared alone in favoring rate cut at July meeting, minutes show
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Manufacturing Boom May Signal Higher Prices for Wary Shoppers
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CFPB Rewrites Open Banking Rule as Banks Feud with Fintechs Over Your Data
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Trump administration halts work on New England offshore wind project
Wealth Mechanics™
Considering a Trust
Trusts can be complex, and many clients feel overwhelmed when trying to determine if a trust fits into their financial plan. That’s why we’ve created the “Considering A Trust” flowchart to help clients assess whether a trust may align with their goals and circumstances.
This flowchart simplifies the decision-making process into a few essential questions, offering clarity around common estate planning objectives like avoiding probate, minimizing estate taxes, and planning for minor children or unique family dynamics.
It serves as a starting point for identifying whether a trust could be a beneficial part of a client’s financial strategy before diving into the legal details with an estate attorney.
It addresses key considerations such as:
- Whether a client’s goals can be met with simpler strategies like beneficiary designations and asset titling
- If privacy concerns and probate avoidance make a revocable living trust worth considering
- When a special needs trust (SNT) may be necessary to protect benefits for a dependent
- Whether an irrevocable trust could help clients reduce estate taxes for clients with larger estates, or ensure the proper transferring of assets occurs in unique family situations (e.g., blended families, etc.)
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Source: fp Pathfinder
MARKET COMMENTARY
Equities
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U.S. markets regained footing, with the S&P 500 up 0.30% after Powell’s Jackson Hole remarks hinted at future rate cuts.
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Rotation favored value and cyclical sectors as mega-cap tech names slipped.
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Retail earnings showed a still-resilient consumer, though companies flagged rising cost pressures ahead.
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Financials, industrials, and materials led gains, while energy jumped over 3% on tighter crude inventories.
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Overseas, developed markets posted slight gains, while emerging markets lagged despite strength in China.
Bonds
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Bonds rallied across the board as Treasury yields fell sharply on Powell’s dovish tone.
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The 2-Year Treasury dropped to 3.68% and the 10-Year to 4.26%.
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Government bonds led the charge, with corporates also benefiting—investment grade closing at 4.91% and high yield at 7.23%.
Macroeconomic Data
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Housing data was mixed: builder confidence slid, but starts rose 5.2% and existing sales climbed 2.0% on lower mortgage rates.
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Jobless claims ticked up—235k initial, 1.97M continuing—signaling a cooling labor market.
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PMI data surprised to the upside: Services at 55.4 and Manufacturing at 53.3, the strongest since 2022.
INDEX RETURNS
(as of Monday’s Market Opening)
|
Total Return (1D) |
Total Return (1W) | Total Return (MTD) | Total Return (QTD) |
Total Return (YTD) |
|
| S&P 500 |
-0.23% |
0.13% | 1.86% | 4.07% |
9.79% |
| Dow Jones Industrial Average |
-0.36% |
1.51% | 3.31% | 3.39% |
7.16% |
| NASDAQ |
-0.29% |
-0.90% | 1.48% | 5.23% |
11.00% |
| NASDAQ 100 |
-0.44% |
-1.24% | 0.87% | 3.27% |
11.46% |
| Russell 1000 |
-0.15% |
0.21% | 1.91% | 4.25% |
10.46% |
| Russell 2000 |
-0.35% |
3.03% | 6.67% | 8.45% |
6.44% |
| Russell 3000 |
-0.16% |
0.31% | 2.16% | 4.47% |
10.28% |
| ACWI |
-0.22% |
0.41% | 3.06% | 4.15% | 14.86% |
Source: MorningStar
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Disclosures
- Wealth Mechanics™ is a registered trademark of Cestia Wealth Management. Unauthorized use of the trademark, including but not limited to commercial use, reproduction, or imitation without explicit written permission from Cestia Wealth Management, is strictly prohibited.
- Market commentary provided by NewEdge Advisors
- Charts concerning market data are provided by Exhibit A.
- Guides and other downloadable firm material respective to financial planning processes and data are provided and powered by fpPathfinder.
- Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
- Cestia Wealth Management is not a legal tax professional. We offer tax gap analysis for clients who desire to have a comprehensive financial plan, which requires in-depth tax strategy and planning as a distinct part of the overall customized solution. Please consult your tax professional on all matters addressed in this report.
- Information about annuities are not to be considered a recommendation. The information provided should not considered a recommendation to purchase or sell any particular security.
- Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.
