Weekly Market Performance — August 22, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of August 18, 2025. U.S. equities closed the week in style, bouncing back from a broadly risk-off week to close mostly higher. Federal Reserve (Fed) Chair Powell lifted rate cut expectations for the mid-September Fed meeting during his speech from Jackson Hole, fueling a cross-asset rally. Treasuries also jumped alongside rate cut bets, while overseas international equity markets ended mostly higher. The dollar reversed its slow and steady strength from the last four days as a result of the central bank Chair’s remarks, while crude oil and gold prices advanced.

Index Performance

U.S. and International Equities

U.S. Equities: The major U.S. equity averages ended the week mostly higher, led by the Dow Jones Industrial Average, while the Russell 2000 small cap index outperformed its large cap counterparts with healthy week-to-date gains. The S&P 500 reversed losses from a broadly risk-off week in dramatic fashion on Friday after Fed Chair Jerome Powell signaled the central bank is in a position to cut rates next month. Powell remarked that monetary policy is currently in restrictive territory, and that the outlook and balance of risks may warrant policy changes. Equities jumped in response as rate cut bets reapproached 90% after dropping near 70% earlier in the week. However, in the run-up to Powell’s remarks from the Grand Tetons, sentiment was somewhat sour as a slide in tech stocks and an underlying risk-off rotation led major averages lower every session this week. Artificial intelligence (AI) competition and spending scrutiny alongside a tariff-related rise in input prices in the August flash Purchasing Managers’ Index print weighed on sentiment, with the former dominating headlines Friday after reports suggested NVIDIA (NVDA) asked suppliers to halt production of its H20 AI chip components.

In other corporate news, mixed takeaways from Walmart’s (WMT) second quarter results were in focus after the retail behemoth missed adjusted earnings forecasts for the first time since 2022. Investors also noted strong comparable sales (a positive sign on the consumer), however, margins softened, and inventory costs rose. Target (TGT) topped earnings expectations last quarter, although shares tumbled after the company announced its current COO, Michael Fiddelke, will be the next CEO starting in February. Shares of Lowe’s (LOW) and TJ Maxx-parent TJX Companies (TJX) rose following strong quarterly results.

International Equities: European stocks traded higher over the last five days, despite early week jitters following the Trump-Putin summit to discuss a ceasefire in Ukraine last Friday. Sentiment subsequently received a lift after President Trump called for direct Russia-Ukraine peace talks. While the region gained ground four out of five days this week, gains were somewhat subdued as traders refrained from outsized moves ahead of Fed Chair Powell’s remarks from Jackson Hole. Among local developments, U.K. shares outperformed as markets shrugged off July consumer inflation arriving a tick above consensus estimates, with fiscal policy dominating headlines as Finance Minister Rachel Reeves continues to explore ways to fill the fiscal gap.

Asia markets closed mixed on the week, with mainland China the standout for the region over the last five days. Enthusiasm for onshore shares continued with the benchmark CSI 300 Index reaching 10-year highs on Friday. Sentiment was lifted by President Trump holding off on raising tariff rates on the country’s exports, as well as rare earth exports reaching six-month highs and continued economic stimulus hopes. Plus, local chipmakers rallied Friday in response to the potential NVDA H20 chip production halt. Elsewhere, Japan dropped as markets shrugged off improving activity data to focus on slowing overseas sales data, also receiving downside pressure from weakness in tech shares and Japanese government bond yields reaching record high levels. India gained while Taiwan closed lower, weighed down by a 3.8% slide in Taiwan Semiconductor (TSM) shares.

Fixed Income, Currency, and Commodity Markets

Fixed Income: The Bloomberg U.S. Aggregate Index traded higher on the week. The monetary policy rate-sensitive two-year yield traded roughly seven basis points lower and the 10-year yield ended roughly six basis points lower. Treasury yields inched higher mid-week as traders pared back Fed rate cut bets in response to hawkish leaning remarks from Fed officials and somewhat stale, but hawkish, meeting minutes from the July Federal Open Market Committee (FOMC) meeting. Nonetheless, Treasuries surged Friday (yields lower) in response to Fed Chair Powell’s remarks from the Cowboy State, sending shorter-term yields lower as the bond market moved to resume its pricing for a potential September rate cut. Friday’s move in yields reversed a week-to-date rise in yields, with the two-year yield shedding 11 basis points and the 10-year falling seven basis points. Fixed income investors cheered the remarks from Powell stating that it may be time for a shift in the central bank’s stance, arriving after whipsaws in recent weeks in response to mixed economic data painting a challenging picture of the American economy. Also in Treasury market news this week, Wednesday’s auction of 20-year bonds drew solid demand, supportive of longer tenors.

Commodities and Currencies: The Bloomberg Commodities Index posted weekly gains on the back of late week gains. West Texas Intermediate (WTI) crude oil futures added over 2%, supported by an uptick in the geopolitical risk premium on rising uncertainty around the end of the war in Ukraine after Russia stated that peace talks were potentially fruitless. Further, traders focused on a sharp six-million-barrel drop in U.S. crude inventories cruising past market expectations, suggesting demand is still robust. Elsewhere, gold prices found week-to-date positive territory despite mostly rangebound trading after Fed Chair Powell’s opened the door to a September rate cut. Silver and platinum posted weekly gains as well, while copper declined. In currencies, the U.S. dollar erased its winning streak as Fed rate cut bets jumped Friday afternoon, while the euro and yen strengthened against the greenback.

Economic Weekly Roundup

Powell Delivered. According to the latest thinking from the Fed, the shifting balance of risks warrants adjusting rates. Softer employment data has likely pushed the Fed toward rate cuts at their September 17 meeting. Since last year’s Jackson Hole event, the upside risks to inflation had diminished and the unemployment rate had increased by almost a full percentage point (3.4% to 4.2%), a development that historically has not occurred outside of recessions (which we do not predict). Tariff effects will be short-lived but not necessarily felt all at the same time. Although not as exciting for news headlines, Chair Powell discussed in today’s speech the four main revisions to the policy framework, a review the Fed does roughly every five years. Demographics, fiscal policy, and other factors suggest that the long-term neutral fed funds rate is likely higher than during the 2010s. Bottom line, the macro-outlook should convince the Fed to cut rates at the September 17 meeting. The hint of upcoming rate cuts will tamp down yields and bolster markets in the near term.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Chicago Fed National Activity Index (Jul), New Home Sales (Jul), Dallas Fed Manufacturing Activity (Aug), Building Permits (Jul final)

• Tuesday: Philadelphia Fed Non-Manufacturing Activity (Aug), Durable Goods Orders (Jul preliminary), Capital Goods Orders and Shipments (Jul preliminary), FHFA House Price Index (Jun), House Price Purchase Index (2Q), S&P Case-Shiller 20-City and National House Price Index (Jun), Richmond Fed Manufacturing Index and Business Conditions (Aug), Conference Board Consumer Confidence Report (Aug)

• Wednesday: MBA Mortgage Applications (Aug 22)

• Thursday: Gross Domestic Product (2Q second reading), Personal Consumption (2Q second reading), Core PCE Price Index (2Q second reading), Initial Jobless Claims (Aug 23), Continuing Claims (Aug 16), Pending Home Sales (Jul), Kansas City Fed Manufacturing Activity (Aug)

• Friday: Personal Income and Personal Spending (Jul), Headline and Core PCE Price Index (Jul), Advance Goods Trade Balance (Jul), Wholesale Inventories (Jul preliminary), Retail Inventories (Jul), MNI Chicago PMI (Aug), University of Michigan Consumer Sentiment Report (Aug final), Kansas City Fed Services Activity (Aug), Bloomberg U.S. Economic Survey (Aug)

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.

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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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