Market Update: August 25th, 2025

Financial Markets

Stocks slipped earlier in the week but rebounded sharply on Friday after the Federal Reserve signaled greater openness to rate cuts, easing investor concerns over a slowing U.S. economy. By the close on August 22nd, the Dow Jones Industrial Average rose 1.53%, the S&P 500 gained 0.27%, while the Nasdaq Composite slipped 0.58%.

Market News

Jackson Hole Symposium

Stocks rallied on Friday after Federal Reserve Chair Jerome Powell delivered a dovish speech at the annual Jackson Hole Economic Symposium. The event has become increasingly influential in recent years, shaping investor expectations around monetary policy. Powell’s remarks this year stood in sharp contrast to his 2022 comments over “some pain” that he had said may be required as the Fed raised rates to fight inflation, which at the time triggered a broad market selloff as investors prepared for tighter financial conditions and a slowing US economy.

On Friday, Powell emphasized that “with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance”, presumably to a more accommodative stance. Markets interpreted the comments as a clear sign that rate cuts could be on the near horizon, and futures quickly reflected this shift in sentiment. The probability of no rate cut in September fell by more than half, dropping from 25% to just 10.8% from Thursday to Friday last week, underscoring how rapidly expectations pivoted in response to Powell’s remarks.

Source: CME Group FedWatch, as of 8/22/25

Leading Indicators

The Conference Board’s Leading Economic Index (LEI) edged down 0.1% in July, extending its decline. Over the past six months, the index has contracted by 2.7%, a sharper pace than the 1.0% drop recorded in the prior six-month period.

The decline was led by softer consumer expectations, weaker new orders, and a slowdown in building permits, though gains in stock prices, fewer initial jobless claims, and an improvement in the leading credit index helped offset some of the weakness.

The LEI continues to signal softer growth ahead, yet the broader U.S. economy has demonstrated resilience, with no major disruptions despite the persistent downtrend in this economic indicator.

Source: The Conference Board

Existing Home Sales

Inventory of existing homes for sale reached its highest level since 2020 at the end of July, rising 15.7% year-over-year to 1.55 million units. This equates to 4.6 months of supply, up from 4.0 months in July 2024, indicating a gradual shift toward a buyer’s market.

Existing home sales were recorded at a seasonally adjusted annual rate of 4.01 million units in July, up 2% from June and 0.8% from a year ago. The median sales price rose modestly by 0.2% year-over-year to $422,400, reflecting softer housing inflation pricing amid increased inventory. Overall, the data indicates easing supply constraints and expanding options for buyers, consistent with a softening housing market.

Source: National Association of Realtors

Retailer Earnings

As Q2 reporting draws to a close, several major retailers released earnings last week, highlighting significant differences driven by the companies’ business models and competitive advantages.

TJX Companies (TJX)

TJX reported both earnings and revenue above Wall Street expectations and raised its full-year guidance. The company benefits from cost advantages by sourcing much of its merchandise from other retailers after goods have already been imported, giving it greater flexibility than many traditional brick-and-mortar competitors, particularly as companies navigate higher tariffs on imports.

Target (TGT)

Target beat Q2 expectations but still showed weakness, with shares dropping more than 6% on the release. The company reaffirmed its outlook for modest sales declines, while an unexpected CEO change underscored ongoing challenges as higher tariffs, social controversies, and the erosion of key differentiators, such as distinctive merchandise and well-kept stores, continue to weigh on performance.

Walmart (WMT)

Walmart beat revenue and earnings expectations for Q2 and raised its sales and earnings guidance despite rising tariff costs. Strength stemmed from online sales growth and growth in comparable store sales, which climbed 4.6% in the US, excluding fuel, surpassing the 4% analyst estimate. At Sam’s Club, comparable sales increased 5.9%, also above expectations. Walmart plans to pass on some tariff costs to customers while absorbing others, depending on the category, demonstrating flexibility that has helped sustain its momentum.

Last week’s reports underscore a widening performance gap among major retailers. Year-to-date, TJX is up more than 12% and Walmart 7%, while Target has fallen over 26%, highlighting stark differences in how each is navigating the current economic environment.

U.S. Government Takes Stake in Intel

The White House announced Friday that it will acquire a 10% stake in Intel, valued at roughly $8.9 billion. The investment will be funded partly through CHIPS Act grants and partly through allocations for secure chipmaking programs. Intel has lagged peers in recent years due to technological setbacks and weaker financial results, but shares jumped more than 5% Friday and have trended sharply higher since early August.

The move underscores a broader shift in U.S. industrial policy, with the government taking a more active role in corporate America. White House economic advisor Kevin Hassett noted the Intel stake could serve as a precursor to a sovereign wealth fund that may expand to include other companies.

Summary

Stocks were choppy through midweek but surged Friday after Fed Chair Jerome Powell struck a dovish tone at the Jackson Hole Symposium, signaling that rate cuts could be approaching. Economic data painted a mixed picture, with leading indicators still pointing to slower growth while existing home sales showed improving supply conditions. Corporate earnings highlighted widening gaps among major retailers, and Intel shares jumped after the U.S. government announced a 10% stake in the chipmaker last week.

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Joseph M. Maas,
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