Weekly Market Performance — August 15, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of August 11, 2025. U.S. equities held on to weekly gains amid a busy week on the economic calendar and relatively quiet news flow elsewhere. Federal Reserve (Fed) rate cut bets were the hot topic of the week as investors digested mixed signals on the American economy and consumer. Treasury yields whipsawed as a result of the economic data prints, ultimately closing the week little changed. Meanwhile, international stocks moved higher with Japan among standouts as major averages logged fresh records and strong weekly gains. Commodity markets faced headwinds with crude oil and gold prices turning lower, while the U.S. dollar weakened.

Index Performance

U.S. and International Equities

U.S. Equities: Stocks gained ground over the last five days, with the Dow leading gains among major large cap averages, while the Russell 2000 benchmark for small cap stocks outperformed its larger counterparts. After a subdued start to the week, the S&P 500 advanced Tuesday in response to benign July consumer inflation data which prompted traders to increase bets on the Fed resuming its rate-cutting campaign next month. Stocks held gains through the middle of the week, edging out fresh all-time highs amid a slight rotation from big tech names to small caps, and shrugging off a much hotter-than-expected July wholesale inflation report Thursday morning. Markets subsequently dialed back rate cut expectations following the report, cooling the S&P 500’s latest rally, before modestly clawing back some of the index’s weekly gain on Friday in response to an unexpected drop in consumer sentiment and a surprise uptick in inflation expectations.

In corporate news, shares of chip equipment maker Applied Materials (AMAT) were weighed down by a lackluster outlook offered Thursday afternoon, posting a sharp weekly loss. Plus, shares of NVIDIA (NVDA) fluctuated throughout the week following reports that NVDA and fellow chipmaker Advanced Micro Devices (AMD) agreed to hand over 15% of Chinese artificial intelligence (AI) sales revenue to the U.S. government.

International Equities: European stocks posted a weekly advance as well. The region broadly turned its attention across the Atlantic, given the full slate of U.S. economic data set for the week and the Trump-Putin summit on Friday afternoon. Although, in local developments, stocks were supported by second quarter gross domestic product (GDP) results for the Eurozone matching estimates, with economic growth remaining positive across the Eurozone. The U.K. continued to draw attention, with the Treasury department reportedly exploring options to increase inheritance tax revenues as finance minister Rachel Reeves aims to fill the fiscal gap. U.K. stocks underperformed on the week, paring gains Friday, as investors digested a drop in economic growth and employment data pointing to ongoing labor market weakness.

Additionally, Asian equities secured back-to-back weekly gains with most major markets closing well in positive territory. Japan led gains as both the Nikkei and Topix Indexes logged multiple record highs over their holiday shortened week. Sentiment along the archipelago was lifted by upbeat corporate results and guidance, as well as strong economic data including manufacturing sentiment, industrial activity, and economic growth. The tech-leaning market also received a boost from U.S. announcements that NVIDIA (NVDA) can sell lower-end chips to China, also supporting the relatively measured gains of South Korea and Taiwan. Mainland China outperformed Hong Kong on the U.S. trade truce and strong market liquidity despite some lackluster macro data delivered during the week, as both markers advanced.

Fixed Income, Currency, and Commodity Markets

Fixed Income: The Bloomberg U.S. Aggregate Index traded little changed Friday afternoon. The monetary policy rate-sensitive two-year yield ended roughly flat while the 10-year yield ended four basis points higher. U.S. Treasuries ended a turbulent week near the unchanged point after whipsawing in response to July inflation data. Treasury yields dropped on Wednesday as markets digested Tuesday’s tepid inflation data, signaling a September rate cut was growing more likely, as well as additional dovish remarks from central bank officials and U.S. Treasury Secretary Scott Bessent’s call for monetary policy easing. Nonetheless, yields retraced part of their move lower in response to hot producer price data on Thursday, and Friday’s contradictory view of consumers provided by mixed retail sales results and a softer University of Michigan consumer sentiment report. Longer-dated securities led the move higher on to close the week as the 30-year yield inched closer to 5%, widening the spread between the long bond and five-year notes near multi-year highs. Bond market focus now shifts forward to next week’s annual Fed symposium in Jackson Hole, where investors will scrutinize Fed Chair Jerome Powell’s potential remarks on the central bank’s rate cutting path.

Commodities and Currencies: The broader commodities complex traded slightly lower this week, measured by a 0.3% drop in the Bloomberg Commodities Index. West Texas Intermediate (WTI) crude oil failed to stray far from the flatline over the last five days, ultimately ending lower as traders awaited the outcome of ceasefire talks on the war in Ukraine between Presidents Donald Trump and Vladimir Putin. Crude prices broadly remained under pressure as benchmarks neared two-month lows from concerns around supply outpacing consumption and U.S. tariffs potentially curbing global trade and manufacturing activity. Gold prices also acted a headwind on the complex as the broadly risk-on mood shifted flows away from the bullion following the U.S.-China trade truce and potentially easing geopolitical concerns in Ukraine. Meanwhile, the U.S. dollar fluctuated, losing ground against its peers after reversing mid-week weakness. The greenback was dragged lower by bolstered hopes of Fed easing next month, while the Japanese yen strengthened in response to strong economic growth data.

Economic Weekly Roundup

Discretionary Items Show Mixed Signs But Listen to the Auto Dealers. Nominal retail sales rose 3.9% from a year ago, outpacing the rate of inflation. The Control Group of retail sales – the category which feeds into the GDP calculations – rose 0.5% in July, suggesting recession risks remain minimal. This report only covers the first month of the new quarter, so we have a lot more data to go. Discretionary spending has started to show some weakness as restaurant spending was -0.4% in July although still up 5.9% from a year ago. Clothing, a category likely impacted by tariffs, rose 7.4% from last year and grew above trend for two consecutive months. Auto sales partially recovered from the decline in May, but July sales were still below March and April levels. Going forward, investors should monitor auto sales and other discretionary categories such as restaurant spending to gauge consumer health. Recession risks remain low, but it’s wise for the Fed to shift to a more neutral stance and cut rates in coming meetings.

Hot Inflation Amid a Backdrop of Slower Growth Could Signal Stagflation-Lite. Headline annual inflation in July was roughly unchanged at 2.7% but core inflation accelerated to 3.1% from 2.9%. We expect further inflation pressure in the coming months as more tariff impacts become apparent in the data. Shelter prices rose 0.2% in July and were the primary factor in the monthly increase. Medical care services are the highest since late 2022, driven by rising costs for dentists and other medical professionals. Used vehicles rose, breaking a four-month trend of declining prices. In a separate report, the National Federation of Independent Business (NFIB) optimism index rose to 100.3, the highest since February of this year as business owners have a renewed interest in expanding their business. Investors must come to grips with inflation above the Fed’s target amid a backdrop of slower growth, setting things up for stagflation-lite. Despite the increase in core inflation, we expect the Fed to cut rates next month as they pay closer attention to the weakening labor market.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: New York Fed Services Business Activity (Aug), NAHB Housing Market Index (Aug)

• Tuesday: Housing Starts (Jul), Building Permits (Jul preliminary)

• Wednesday: MBA Mortgage Applications (Aug 15), FOMC Meeting Minutes (Jul 30)

• Thursday: Initial Jobless Claims (Aug 16), Continuing Claims (Aug 9), Philadelphia Fed Business Outlook (Aug), S&P Global U.S. Manufacturing, Services, and Composite PMI (Aug preliminary), Leading Index (Jul), Existing Home Sales (Jul)

• Friday: No economic releases scheduled

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

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The fast price swings of commodities will result in significant volatility in an investor's holdings.

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