Financial Market Update – Week of 08/25/2025

Presented by Marc Aarons

 

As summer winds down, the stock market is anything but laid-back. Major U.S. indices ended the week with a bang, driven by Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, signaling a high probability of an interest rate cut in September. Here are the main things you need to know.

 

Stock Index Performance

• The S&P 500 gained 0.27%.
• The Nasdaq 100 slid by 0.90%.
• The Dow Jones Industrial Average jumped 1.53%.

Fed Watch

• On Friday, Powell noted that while the U.S. economy has shown resilience, downside risks to employment are rising, warranting a more accommodative policy stance. But he stopped short of a firm commitment, emphasizing the Fed’s data-dependent approach.
• Markets rallied and rate-sensitive assets surged for the day, though some analysts warn that over-optimism could be risky if upcoming jobs or inflation data fail to meet expectations.
• According to the most recent data, inflation remains elevated, with core Consumer Price Index (CPI) and core PCE (Personal Consumption Expenditures) running just above 3% — even as the Fed has kept interest rates high to cool price pressures. However, Powell said the risks to the job market may require the Fed to cut rates anyway.

Consumer Data

• Fitch Ratings cautions that U.S. consumer spending is set to decelerate sharply in the second half of 2025, amid a weakening labor market and tariffs potentially driving up costs. With the possibility of disposable income growth slowing and cost pressures mounting, Fitch sees a “deteriorating” outlook for retail and consumer sectors.
• Walmart has warned of rising input costs and sees margin pressures mounting, especially as lower- and middle-income customers shift to cheaper products. Target, more exposed to discretionary categories, said price hikes are a last resort.
• U.S. existing home sales rose 2% in July to an annual rate of 4.01 million units — the largest gain since February and above forecasts. This was driven by a slight dip in mortgage rates, slowing home price growth, and the biggest housing inventory in five years.

The Week Ahead

• Nvidia (NVDA) reports earnings on Wednesday. As a leading force in the tech sector and broader market, Nvidia’s results and guidance are expected to be major market movers, especially given its AI leadership and the recent rebound in semiconductors.
• Release of the U.S. Personal Consumption Expenditures data, the Federal Reserve’s preferred inflation gauge, is set for Friday (Aug 29). Markets are pricing in a near-certain cut, but the Fed insists its decision will hinge on upcoming data rather than political pressure.

That’s it for this week’s update! With children going back to school and fall approaching, planning is top of mind for many. If you have any questions about strategy, near- or long-term, feel free to contact me. I am here to address any concerns and work with you to attain the best results.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

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