Weekly Market Performance — August 8, 2025

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of August 4, 2025. After ending last week with a thud, stocks clawed back losses and returned to positive territory with solid weekly gains. A fresh wave of dip buying, dovish remarks from Federal Reserve (Fed) officials, and sectoral tariff relief boosted market sentiment over the last five days, while Treasury yields also moved higher. European and Asian equities also posted gains with ceasefire hopes in eastern Europe and tariff reprieve for Japan among boosts to investor enthusiasm. Meanwhile, the U.S. dollar weakened, and commodities inched higher as gains in gold offset crude oil losses.

Index Performance

U.S. and International Equities

U.S. Equities: U.S. equities posted healthy weekly gains for the first full week of August as Wall Street bulls powered major large and small cap averages higher. Following last Friday’s slide, dip buyers stepped in on Monday, August 4, to kick the week off with the S&P 500’s biggest daily advance since May thanks to bolstered rate cut bets and a strong second quarter earnings season. Stocks were supported by a batch of dovish Fedspeak throughout the week, as well as some positive tariff takeaways as the White House announced Wednesday evening that companies making or committed to investments in the U.S. are eligible for carve outs from 100% semiconductor tariffs. Positive corporate news flow supported stocks as well with Apple (AAPL) shares rallying after announcing a $100 billion U.S. manufacturing pledge, which ensured the iPhone maker will be eligible for exemption from Washington’s chip tariffs. Additionally, tech shares and the artificial intelligence (AI) theme received a boost after data-analysis software firm Palantir Technologies (PLTR) posted a nearly 50% year-over-year revenue increase and raised its 2025 forecasts.

Markets did face some headwinds, however, with equities experiencing some downside pressure in response to a weaker-than-expected ISM services report, featuring lackluster services activity, sticky price pressure, and easing headcount data — fueling concerns about how the Federal Reserve (Fed) will navigate the environment of rising prices and contracting employment. Also in play was some market chatter surrounding overheating optimism, weak seasonality, and market concentration risks.

International Equities: European equities logged strong gains in one of the region’s strongest weeks since May. Sentiment was lifted by Russia-Ukraine peace deal hopes as Presidents Trump and Vladimir Putin are reportedly set to schedule a meeting to discuss a ceasefire in Ukraine. Investors also parsed another busy earnings calendar for tariff-related effects, with most companies weathering tariff effects well last quarter. Some positive economic data also contributed to risk appetite. Among highlights, June Eurozone retail sales matched estimates and topped year-over-year forecasts by 0.5%, while Eurozone business activity expanded last month. U.K. shares lagged after the Bank of England (BoE) delivered a rate cut after a historic three-way split forced a second vote, with fiscal policy concerns also in view, while Germany rallied on reports its economy ministry is preparing to launch a €100 billion investment fund focused on defense, energy, and raw materials.

The Asia-Pacific region ended higher with nearly all major markets posting solid weekly gains. Japanese equities dominated investor focus over the last five days, broadly lifted by rate hike hopes and improved U.S. trade deal optimism. Japan extended gains as tariff relief arrived Friday with Japan’s lead trade negotiator announcing reduced auto levies and that U.S. levies will not be stacked. Tech names also supported Japan, while lifting its fellow tech-leaning markets of Taiwan and South Korea as well. Tech shares, which moved higher early in the week, extended gains after President Trump announced carve outs for semiconductor tariffs. India lagged as investors took some risk off the table amid trade tensions after the White House announced an additional 25% levy due to Indian buying of Russian oil.

Fixed Income, Currency, and Commodity Markets

Fixed Income: The Bloomberg U.S. Aggregate Index traded lower this week. The monetary policy rate-sensitive two-year yield ended roughly seven basis points higher, while the 10-year yield ended six basis points higher.

This week’s Treasury auctions saw weak demand from both foreign (largely indirect bidders) and domestic buyers (direct bidders). Tuesday’s $58 billion 3-year auction exhibited total weak demand with indirect bids falling to 54.1%, well below the 66.6% 6-month average. Dealers were left with 16.5% of the issue, slightly above the past six-auction average of 15.2%. The bid-to-cover fell to 2.51x vs. 2.52x in June and the past six-auction average of 2.61x, pointing to weaker aggregate demand, coupled with a 0.4-basis point tail. Wednesday’s 10-year auction drew below-average investor demand, leading to increased dealer takedown and the auction's yield clearing 1.1 basis points above expectations, which is the largest tail in over a year. Indirect bidders took down just 64.2% vs. the past three average of 68.1%. The lack of indirect bidder demand and auction tails is likely due to the large rally in the Treasury market after last Friday’s weak jobs report, which pushed yields lower by 0.15–0.28%. Of note, though, it isn’t just U.S. Treasury auctions that have seen weak demand recently. Japan’s 10-year government bond auction on Tuesday also saw limited investor appetite. Thursday offered yet another test for the bond market after a $25 billion auction of 30-year bonds was met with lackluster demand. Another weak auction likely indicates current yields are seen as too low given current inflation risks, which limits the near-term ability for yields to fall meaningfully from current levels.

Commodities and Currencies: The broader commodities complex traded slightly higher this week, measured by a 0.3% gain for the Bloomberg Commodities Index. West Texas Intermediate (WTI) crude prices acted as a drag on the complex over the last five days as prices dropped on the potential Russia-Ukraine ceasefire eased supply concerns, despite U.S. sanctions on India. Weakness this week was also underpinned by another OPEC+ output hike and ongoing trade tensions creating lingering concerns around global growth and weakening demand. Natural gas also traded lower. Gold supported the complex, drawing some attention with a late week jump fueled by U.S. authorities clarifying that U.S. reciprocal tariffs do apply to gold bars. The development sparked concerns around trade flows from key refining hubs and forced spreads between U.S.- and London-traded gold wider. Silver also gained. In currencies, the dollar printed a weekly loss as bolstered Fed rate cut bets continued to gain traction on dovish Fedspeak and weak economic data releases.

Economic Weekly Roundup

Dissenters Within the Bank of England. The BoE cut rates Thursday to 4%, the lowest in over two years, as the job market weakened amid rising inflation risks. In a 5–4 vote, the committee voted to cut as the weakening labor market became paramount. Earlier in this meeting, the committee failed to find consensus and had a three-way split, the first time ever that two rounds of voting were necessary. The dissension could likely mirror what we have in the U.S. Labor markets appear weak, but inflation could reaccelerate in the near term. On this side of the Atlantic, job data continues to show weakness. Thursday morning, the Department of Labor reported an uptick in continuing claims, reaching its highest since mid-2021. Bottom line, stagflation — slow growth with higher inflation — could raise its head as we close out 2025.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: No economic releases scheduled

• Tuesday: NFIB Small Business Optimism (Jul), Real Average Hourly and Weekly Earnings (Jul), Headline and Core CPI (Jul), Federal Budget Balance (Jul)

• Wednesday: MBA Mortgage Applications (Aug 8)

• Thursday: Headline and Core PPI (Jul), Initial Jobless Claims (Aug 9), Continuing Claims (Aug 2)

• Friday: Retail Sales (Jul), Empire Manufacturing (Aug), Import Price Index (Jul), Export Price Index (Jul), Industrial Production (Jul), Manufacturing (SIC) Production (Jul), Capacity Utilization (Jul), Business Inventories (Jun), University of Michigan Consumer Sentiment Report (Aug preliminary), Net Long-term TIC Flows (Jun), Total Net TIC Flows (Jun)

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