Market Recap & Outlook: Your Weekly Market Compass – August 15, 2025

US Stocks: Records Fall, Momentum Holds Strong

Fueled by robust earnings and mounting expectations for interest rate cuts, U.S. equities continued their upward trajectory.

• S&P 500: Surged 2.4% for the week, closing in on a new record.

• Dow Jones Industrial Average: Rose 1.3%, with technology and consumer names leading.

• Nasdaq Composite: Powered ahead by 3.9% and set fresh record highs, as Apple, Alphabet, and Tesla continued their impressive run.

The Outlook: After four consecutive months of gains, some analysts are sounding caution. August and September are historically tricky for equities, and many investors are watching the latest inflation and tariff data closely.

Global Markets: Mixed Signals

While U.S. markets thrived, overseas performance was varied.

• Europe: Modest gains, but sentiment remains fragile. Investors eye inflation data and await clear direction from the ECB, as consumer demand remains weak and uncertainty lingers.

• Asia: Contrasts marked the region—Japan’s Nikkei saw cautious gains on renewed growth and central bank support, while Chinese equities edged up on stable monetary policy and solid industrial output. However, China’s property investment sector remains a drag, down more than 11% year-to-date.

• Global Economic Health: The IMF raised its 2025 global growth forecast to 3.0%, reflecting fiscal expansion and improved conditions. Risks from geopolitics and trade disputes persist.

Bonds & Interest Rates: Dovish Tone Prevails

Bond markets remained calm with growing conviction of a Fed pivot.

• US Treasury Yields: The 10-year yield stayed near 4.2%, anchored by expectations for future rate cuts.

• Federal Reserve Policy: Rates were held at 4.25%–4.50% at the July meeting, but a more dovish tone emerged. The market anticipates a September rate cut and possibly up to four reductions by year-end.

• Mortgage Rates: Refinancing rates dropped by 23 basis points. Forecasts suggest mortgage rates could fall toward 6% if the Fed follows its plan.

Economic Growth & Inflation: A Balancing Act

Recent data points to a gradual economic slowdown, giving the Fed leeway to ease.

• Growth: U.S. GDP growth is moderating, with consumer spending up just 1.4% in Q2. July retail sales posted a modest 0.5% gain.

• Labor Market: Unemployment ticked up to 4.2% in July, confirming a cooling job market.

• Inflation: While inflation remains above target at 2.7% Core PCE and 2.8% projected for July CPI, the Fed hopes recent tariffs’ impact on imported goods prices will be temporary.

Key Events Driving the Narrative

• Tariffs & Trade: President Trump’s latest tariff increases created volatility, especially in tech and imported goods. U.S.-India trade relations cooled as India postponed new purchases.

• Fed Leadership: The nomination of Stephen Miran to the Fed Board sparked debate about future policy direction.

• Stagflation Concerns: The ISM services index barely held above 50, raising stagflation fears and focusing attention on wage growth, labor data, and consumer sentiment.

Looking Ahead: Next Week’s Focus

• Tuesday, Aug. 19: Watch for the release of July’s U.S. Consumer Price Index (CPI)—crucial for assessing inflation trajectory.

• Friday, Aug. 22: July U.S. Retail Sales data and the latest University of Michigan Consumer Sentiment survey will provide further insight into consumer health.

• Globally: Key releases include Australia’s wage and labor data, Japan’s Q2 GDP, and Chinese industrial production numbers.

Investors will be searching for confirmation that inflation is abating and that the Fed will proceed with its rate cut plans. The impact of tariffs and the political backdrop will also be key drivers in market sentiment.

For more information and personalized guidance, please feel free to reach out to Vistamark Investments LLC. You can contact us at 312-895-3001, visit our website at www.vistamarkllc.com, or send us an email to info@vistamarkllc.com.