The Market Update with EP Wealth Advisors Managing Director, Investments -
Adam Phillips, CFA^®, CAIA, CFP^®

Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA^®), a CERTIFIED FINANCIAL PLANNER™ (CFP^®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.

Market Update: Job Data Shakes Fed Rate Expectations 
August 4, 2025 

 Last week was a busy one for markets, with headlines dominated by earnings from several tech giants and major tariff announcements. But two events, in particular—the Federal Reserve’s policy meeting and the latest jobs report—offered critical insight into the current state of the economy. 

 FOMC Meeting: No Cut, But a Rare Dissent 
The Federal Open Market Committee (FOMC) met last week and as widely expected, chose not to cut interest rates. However, for the first time in over three decades, two Federal Reserve governors dissented—voting in favor of a rate cut—while the remaining ten members held rates steady. 

Fed Chair Jerome Powell acknowledged signs of softening job demand during the post-meeting press conference, but he maintained that the overall labor market remained healthy. 

 Jobs Report Tells a Different Story 
Just two days later, the July jobs report suggested a more fragile economic picture. Only 73,000 jobs were added last month—well below expectations. Worse, prior months were revised downward by a net 260,000 jobs, revealing that recent labor market strength may have been overstated. 

The three-month average now sits at just 35,000 new jobs per month, far below the 82,000 monthly average seen during last year’s rate cuts. In response, markets sold off on Friday but have since rebounded as expectations grow that the Fed may now cut rates in September. Current market pricing shows a 90% chance of a cut next month. 

 Outlook and Positioning 
While inflation remains a concern, slowing job growth is strengthening the case for easing rates. With another jobs report and two inflation readings due before the Fed’s next meeting, there’s still more data to digest. 

 At EP Wealth, we continue to maintain a quality bias in our portfolios and remain neutral on stock positioning. As always, if you have questions, please reach out to your advisor. 

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Video Summary: 

Adam Phillips: [00:00:00]

So last week had plenty to offer investors.

We saw major tariff announcements. We saw four of the, the seven magnificent seven companies report earnings last week. But this week I wanna talk to you about the FOMC meeting that occurred last week, as well as the jobs report that we got on Friday. So, first. The Fed meeting last week. This is the Federal Open Market Committee.

This is the FOMC meeting. The group meets, uh, eight times a year, and this was notable, uh, for, for a, a couple of reasons. The, this, there was no rate decision, so the Fed did not cut rates. That was pretty widely expected. But what was an interesting about this one is that it was the first time in 32 years, or about 259 meetings where we actually saw two.

Uh, two federal, uh, governors, uh, federal Reserve governors actually dissent. So they voted in favor of cuts. The, the remaining 10 voting members of the FOMC voted to leave rates unchanged for this meeting, so that was [00:01:00] really interesting. We also saw in, in the press conference that followed Fed Chair Jerome Powell talked about how there was still a lot that that needed to be determined in terms of, uh, the inflation and where that is headed heading.

He did note some. Uh, some slowing, uh, job demand, but, but it, it appeared that the, the labor market remained healthy. Now you wonder if the Fed could have, uh, if they could take it all back, if they would have, because just two days later we got the, the jobs report for the month of July, and that painted a very different picture than the one we've been looking at over the last several months.

Specifically, we saw 73,000 jobs added to the economy in the month of July. That was well below consensus estimates, which were higher by about 30,000 or so. But even beyond this headline figure, we saw there were net revisions to the downside of about 260,000 jobs. And so what that tells us is that the [00:02:00] perceived strength of the labor market in the last couple of months, uh, it was actually, uh, really just a mirage.

Things were not as strong as, as they appeared to be. And so now it, it is leading us to question the resilience of this economy. And and where things are actually heading. Because of this, we saw the market sell off quite a bit. On, uh, on

Friday in in result, uh, in response to this news today, we're, we're recording this on, on a Monday morning.

We're seeing the market rebound because what this is all doing is it's leading to greater odds that the Fed will cut when it meets next time, which is in mid-September. Actually, the market is pricing in, uh, odds of a, uh, 90% odds of a cut, uh, in September. Now I will note that before the Fed meets again, we will receive another jobs report.

We will receive two more inflation reports. But for now, the latest data suggests that the Fed is probably ready to cut rates. I, I will just highlight the fact that, [00:03:00] that on a three month basis, the, the, the economy has added about 35,000 jobs. That is very, very low. That is, uh, that is after accounting for these downward revisions of 260,000.

So 35,000 jobs being added on a, on a monthly basis is extremely low. When the Fed decided to cut rates by 50 basis points this time last year. The monthly average at that time was about 82,000, and things are much, much slower right now. And so if this is the beginning of a trend, then the Fed certainly wants to get ahead of it and, and not stay in this high rate environment any longer than it needs to.

Now, obviously they're still balancing the other. Part of their dual mandate, which is ensuring price, stability, and inflation is still showing some signs of upward pressure. So I do not envy the Fed's, uh, job right now. And the, and the position that they are in, they are obviously getting a lot of pressure from President Trump and, and those within the administration.

So this is, uh, not gonna be an easy decision for them [00:04:00] regardless. But for us as investors, we are watching because this is certainly. It helps to provide a little bit more clarity to the economic picture and suggest that maybe things aren't as, uh, as strong as they appeared to be. It's one of those reasons that we maintain a quality bias within our portfolios, and we are neutral when it comes to our overall stock and equity positioning across our portfolios.

We're gonna get plenty of data, uh, around the economy, around earnings, uh, over the next week or so. So I'm gonna leave it there for now. If you have any questions, please don't hesitate to reach out to your advisor and I'll look forward to seeing you next week.