CWS Market Review – August 5, 2025

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The Weak July Jobs Report

The stock market got a big shock on Friday when the Labor Department said that only 73,000 new jobs were created last month. That was below expectations for a gain of 100,000 jobs, and as expectations go, that’s quite modest.

But what really hit Wall Street were the revisions to the old data. The numbers for May and June were revised lower by a combined 258,000. That means that the economy created only 19,000 jobs in May and 14,000 in June.

Here’s a look at the original jobs report compared with the revisions.

The unemployment rate increased by 0.1% to 4.2% for July. I like to look at the decimals, and the unemployment rate came very close to rounding up to 4.3%. We now have the highest unemployment rate since October 2021.

This was a very unusual jobs report. For example, health care and social assistance combined for 94% of the job growth.

The jobs report is the cause for a major change in outlook because these new numbers indicate that the jobs market isn’t nearly as strong as we thought. It was only last Wednesday that the Federal Reserve said in its policy statement that the “unemployment rate remains low, and labor market conditions remain solid.”

Maybe not.

The futures market responded immediately, and it looks like a September rate hike is back on the table. The odds of a Fed rate cut in September soared to 89%. Before the jobs report, the odds were around 40%. There’s even talk now of the Fed cutting by 1% before the end of the year.

The S&P 500 lost 1.60% on Friday. That was the biggest lost for the index since late May. During the month of July, Friday’s loss was more than double the next worst daily loss.

The quiet upwards market that we’ve been enjoying this summer may no longer be with us:

There were few signs of strength in the July jobs count, with gains coming primarily from health care, a sector that has continued to show strength in the post-Covid recovery. The group added 55,000 jobs, easily leading the way. Social assistance also contributed 18,000 jobs. The two sectors combined for some 94% of the job growth.

Retail added nearly 16,000 jobs and the financial sector was up 15,000.

However, federal government employment continued to decline, down 12,000 for the month and 84,000 since its January peak, before Elon Musk’s Department of Government Efficiency began paring down the jobs rolls. Professional and business services lost 14,000.

Is the economy slowing, or it coming to a crashing halt? We don’t have the data yet to say.

There were some good bits in the jobs report. For example, average hourly earnings rose by 0.3% last month which matched estimates. Over the past year, average hourly earnings are up 3.9%. That’s not bad, but I want to see it go higher. Over the last year, average hourly earnings increased by 3.9%.

The labor force participation rate edged down to 62.2% That’s the lowest since November 2022. The broader U-6 rate, which counts “discouraged workers,” rose to 7.9%.

President Trump was not happy with the jobs report, especially the revisions. He fired Erika McEntarfer, the head of the Bureau of Labor Statistics.

The president has demanded lower interest rates from the Fed, and he may soon get his wish. On top of that, Adriana Kugler just announced her retirement from the Federal Reserve Board. That gives the president an opportunity to appoint a new member.

Folks on Wall Street are now talking about the Fed lowering rates by 1% before the end of the year. If that’s correct, that would be a big boost for value and defensive stocks. I’ll give you an example. On Friday, as the market was falling, shares of American Water Works (AWK), one of our Buy List stocks, gained nearly 4%.

IDEXX Labs (IDXX) Soars 27% on Earnings Beat

In last week’s issue, I listed some stocks that I’m considering for next year’s Buy List. One of them, IDEXX Laboratories (IDXX), gave us a nice surprise on Monday. The company beat earnings, raised guidance and soared by more than 27% in Monday’s trading.

I wish I could take credit for predicting this, but I was as surprised by the big move as the market was. I merely said I was looking at the stock.

IDEXX is an interesting company, and it had a few industry segments. For example, IDEXX provides diagnostic solutions for pets. It also develops diagnostic tests to detect diseases in livestock and poultry. The company also does water testing so it can spot E. coli. IDEXX has more than 10,000 employees and it serves over 175 countries.

IDEXX mostly stays out of the headlines although it has faced anti-trust lawsuits. This is common among companies with strong positions in their market. IDEXX usually runs its gross margin near 60% and its operating margin around 30%. I also really like the recurring revenue model.

For its Q2, IDEXX had reported earnings of $3.63 per share. That was 33 cents per share better than Wall Street’s consensus, and 49% better than last year’s result. Quarterly sales rose 11% to $1.11 billion which beat estimates of $1.07 billion.

CEO Jay Mazelsky said, “We saw exceptional momentum with IDEXX InVue Dx™ placements, exceeding expectations as veterinarians adopted this slide-free technology to streamline workflows and gain faster, more accurate clinical insights. This growth builds on the successful launch of IDEXX Cancer Dx™ in North America. Our focus on helping veterinarians gain deeper diagnostic insights to inform patient care continues to drive customer loyalty and sets a solid foundation for sustained long-term growth.”

IDEXX raised its full-year guidance to a range of $12.40 to $12.76 per share. The previous guidance was $11.93 to $12.43 per share.

IDEXX also raised its 2025 sales guidance from the $4.10 billion to $4.21 billion range up to $4.21 billion to $4.28 billion.

I can’t say that IDEXX is a bargain at these prices, but it’s an innovative company that’s not well-known and it has very sound finances. Over the last 34 years, its total return has exceeded 67,000%.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on August 5th, 2025 at 10:01 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.