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: Markets Rally as Fed Hints at September Rate Cut
August 25, 2025 

Markets rallied sharply at the end of last week following comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium. Powell’s remarks suggested the Fed may be preparing to cut interest rates in September, which sent equities higher. The S&P 500 gained about 1.5% on Friday, and the Dow reached a new all-time high. 

 Despite this optimism, it’s important to note that several key data points—such as another jobs report and an additional inflation report—will be released before the Fed’s next meeting in mid-September. These could influence whether the anticipated rate cut materializes. At current levels, markets remain vulnerable to disappointment or surprises. 

 Looking ahead, one of the most closely watched events this week will be Nvidia’s earnings report, scheduled for release Wednesday after the market close. Nvidia has become the bellwether of the artificial intelligence trade, with about 40% of its revenue tied to major tech companies including Meta, Microsoft, Alphabet, and Amazon. The company is now valued at $4.4 trillion, representing roughly 8% of the entire S&P 500. With such a large weight in the index, Nvidia’s performance has significant influence on overall market direction. 

 While Nvidia and Meta have each posted gains of about 30% this year, they are the only two of the widely discussed “Magnificent Seven” stocks to rank in the S&P 500’s top 100 performers year-to-date. This underscores the breadth of strength across the broader market, as many other companies are also delivering strong results. 

 Diversification remains a key principle in today’s environment. The AI trade continues to generate enthusiasm, but balancing conviction with risk management is essential. Markets will be watching Nvidia’s results closely this week, alongside ongoing economic data, to gauge the next phase of momentum. 

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Video Summary: 

On Friday of last week, we saw markets rebound quite sharply. In response to Fed chair Jerome Powell's comments at the Jackson Hole Economic Symposium. This is the annual meeting with central bankers from around the world, and he provided comments that. Seem to suggest that the Fed is getting ready to cut rates in September.

So we saw markets rebound. The s and p 500 rallied about one point a half percent on the day, a really sharp rally. We saw the Dow hit a new all time high. You know, we could talk at length about, about what this means, where we're going from here. I'll just say that markets are at an all time high. They certainly, uh, expect the fed to cut rates in September.

We do as well, but we also acknowledge that there's a whole lot of data between now and when the Fed ultimately meets in the middle of September, we're still waiting for another jobs report. We're still waiting for, uh, another, uh, inflation report. And so things can [00:01:00] change and the market at these levels is vulnerable to disappointment and to to surprises.

So we're gonna continue to watch the data as we get it and maintain that long-term perspective Now. One of the things that I'm watching this week is, uh, is Nvidia and it's, it's reporting earnings on Wednesday after the market close. This is something we talk about every earning season. They're always, uh, fairly late in the earning season, so they are one of the last companies to report earnings for the second quarter.

But why am I watching them? This is really the bellwether for the, the AI trade. Uh, they, they get about 40% of their revenues from meta, which used to be Facebook from Microsoft, from Alphabet or Google, uh, and from Amazon. So four of the largest companies account for about 40% of their revenues. So there's a lot riding on this.

But I, I also mention Nvidia because they have really rallied over the last couple of [00:02:00] years, they've seen tremendous strength in their stock price. The company is now valued at $4.4 trillion. They account for about 8% of the overall s and p 500. And so we know that because the s and p 500 is what we call a cap weighted index.

The larger they are in terms of valuation, the more influence they will have. And so at 8% they can really move the needle on the overall stock, stock market performance. So this is not a, a call on, on Nvidia or anything of that nature. We, we still, uh, we do own it within our individual stock strategy, but we are diversified.

And I think that's really important that you can have faith, you can have conviction in this AI trade, but you also want to manage risk. Accordingly and, and, um, so at 8%, this stock has performed tremendously well. And one of the things I would point out is that I was actually really surprised to learn this morning when I looked at the rankings of stocks in the s and p 500 in terms of year to date performance.[00:03:00]

We talk about the Mag seven so much, we don't talk about the s and p 493 a whole lot. So of the Mag seven companies, only two of them. Are ranked in the top 100 in terms of year to date performance. That's Nvidia at number 46, if I recall correctly. And that's meta, uh, or what we used to refer to as Facebook at number 62.

So that means that yes, their performance, those two up about 30% or so this year, it's, it's been great, but there's a whole lot of companies that are performing just as well, if not better. And so I think that's really important that when we, we hear about these because they, they are worth so much in terms of overall valuation.

Meta is approaching close to 2 trillion. Uh, Nvidia at 4.4 trillion, contributing about 8% to the s and p 500. But there's a whole lot going on beneath the scenes, and that's why we remain diversified in our portfolios. We, we [00:04:00] certainly believe in things like the AI trade, but we also wanna be careful to manage risk accordingly.

So one thing that I do wanna point out there. So we are focused on Wednesday's earnings. I, uh, I, I think that's really the big event for this week. Um, there's some economic data that we will watch, um, but, uh, but I really think that the big one this week is going to be earnings because that'll provide us with the, the latest read on the artificial intelligence trade.

And so, um, so we'll see. But fortunately, we're diversified investors and so if we do see. Uh, the stock stumble, uh, a little bit in response to that. Um, that's, that's why we are diversified within our portfolios. Um, but hopefully it goes well. I'll look forward to seeing everyone next week. If you have any questions between now and then, don't hesitate to reach out to your advisor.

See you next [00:05:00] week.