Equity Overview

U.S. equities extended their advance in August, with major indices reaching new highs mid-month before consolidating in the final week. Technology and select consumer names continued to provide leadership, while market breadth broadened meaningfully. Nine of eleven S&P 500 sectors posted gains, led by communications and materials, while utilities lagged.

Both growth and value stocks participated, though mega-cap technology leadership narrowed later in the month. Semiconductor and AI-related names delivered mixed results, as high expectations around earnings led to some post-report pullbacks despite generally solid fundamentals. Encouragingly, participation expanded across industrials, financials, and consumer discretionary sectors, reinforcing the view that leadership is widening beyond technology.

Macro Overview

The macroeconomic backdrop in August was characterized by both resilience and new uncertainties. GDP estimates were revised higher on strong consumer spending, while inflation edged up modestly but remained within the Federal Reserve’s expected range. The labor market showed signs of cooling, with job gains slowing and unemployment holding at 4.2%, though wage growth continued to support consumer sentiment.

The Federal Reserve kept interest rates steady at its July meeting, but attention has now shifted to September, where debate continues over the timing of potential policy easing. Meanwhile, geopolitical and trade risks lingered, particularly around tariff policy and pending legal challenges tied to recent executive actions.

Looking ahead, markets remain focused on earnings momentum, sector rotation, and the interplay between monetary policy and global economic developments. We continue to believe a disciplined focus on earnings-driven opportunities positions the fund well for the remainder of the year.