Over the past several weeks, markets have been reacting to a mix of economic headlines and renewed uncertainty. U.S. stocks—particularly in growth-oriented sectors—have experienced heightened volatility, driven by persistent inflation concerns, new tariff developments, and signs of slowing economic growth.
Looking ahead, the Federal Reserve has signaled that they may continue lowering interest rates later this year. With inflation showing signs of cooling, the Fed appears increasingly confident that it can ease monetary policy without reigniting inflation. Lower rates would help support economic growth and provide a more favorable backdrop for both stocks and bonds.
In response to these shifting dynamics, we recently made changes to our investment models. These updates are part of our disciplined, long-term approach and reflect a proactive focus on risk management—not short-term market predictions.
While headlines and short-term market swings can be unsettling, it's important to keep this volatility in perspective and stay grounded in the long-term strategy that drives successful investing.
What’s Driving the Volatility?
Markets have been digesting a range of crosscurrents: persistent inflation pressures, slowing global growth expectations, and renewed tariff announcements that have reignited trade tensions. The recent implementation of tariffs by the U.S. on key trading partners has sparked contention among major global economies, raising questions about the medium-term growth and inflation outlook.
Meanwhile, global competition in artificial intelligence (AI) has contributed to sharp swings in technology-related stocks. The largest single-day sell-off in AI stocks earlier this year highlighted how sensitive these areas are to shifts in sentiment. Still, longer-term trends in technology adoption remain strong.
International developed markets have fared relatively well, supported by broader equity participation and the potential for economic stimulus in Europe. This backdrop has created a more balanced opportunity set globally, even as uncertainty remains elevated.
Volatility Is Normal—Even Healthy
It’s worth repeating: markets do not move in straight lines. On average, the S&P 500 experiences a 10% pullback roughly every 1–2 years. Short-term drawdowns are a natural and expected part of long-term investing.
Though uncomfortable, periods of volatility often create opportunity. What we’re experiencing now is part of a healthy market cycle—a recalibration of expectations around growth, policy, and valuations.
Our Investment Models: Structured for Discipline and Opportunity
At Canty Financial, our portfolios are built with discipline and designed to weather many different market environments. We build model portfolios designed to match a range of risk levels and investment objectives. Clients are placed in the model that best fits their personal situation, including time horizon, goals, and comfort with risk. We don’t react emotionally to headlines—we rebalance with purpose, manage risk through broad diversification, and maintain a forward-looking view.
Our portfolios include exposure across asset classes, sectors, and geographies—but we maintain a strategic tilt toward what we believe offers medium to long-term value and return potential.
Currently, our models remain overweight in U.S. equities, with a focus on large-cap stocks and exposure to technology and cyclical sectors. These areas have driven much of the market’s gains in recent years, and we continue to believe in their long-term growth potential—even if short-term volatility is part of the journey.
Recent Rebalance: What Changed and Why
With the recent pullback in equity markets, many portfolios drifted below their target stock allocations. As part of our disciplined rebalancing process, in the past few weeks we trimmed some bond exposure and added to equities—essentially buying stocks at lower prices. This is not about trying to time the market—it’s about staying aligned with your long-term plan.
Within equities, we made several important changes:
Within fixed income:
Staying the Course Through Cycles
Market volatility is uncomfortable—but it’s normal. While every market cycle has its own story, the pattern of uncertainty followed by recovery is a familiar one. The best outcomes historically have come to those who remain patient, disciplined, and invested.
Taking on risk is not about reacting to market noise—it’s about making intentional decisions that align with your long-term plan. Diversification, rebalancing, and clear risk management help reduce the impact of volatility and keep portfolios aligned with your objectives.
If you have any questions about your portfolio, our recent changes, or how your plan is positioned for long-term success, don’t hesitate to reach out. We’re here to help you stay focused—especially when the market isn’t.
-The Canty Financial Team
Bill Canty, CFP®, CPA, Financial Planner
Ed Canty, CFP®, Financial Planner
Joe Canty, CFP®, Financial Planner
Tina Alteri, CPA, Tax Advisor
Maureen Walsh, EA, Tax Advisor
