Market Update: September 2, 2025

Financial Markets

U.S. stocks notched new highs on Thursday last week, driven in part by an upward revision to second-quarter GDP. However, stocks sold off sharply on Friday, setting a slightly negative tone heading into September. For the week ending Friday, August 29th, the S&P 500 slipped 0.10%, while both the Nasdaq Composite and the Dow Jones Industrial Average declined 0.19%.

Market News

Personal Income, Spending, & Saving. Personal income rose 0.4% and personal spending increased 0.5% in the month of July, while the personal savings rate remained steady at 4.4%. The figures came in line with expectations, suggesting steady consumer momentum and reinforcing signs of economic stability.

Source: US Bureau of Economic Analysis

PCE Inflation

Alongside income and spending data, the BEA reported that headline PCE inflation rose 2.6% annually in July, while core PCE, the Fed’s preferred gauge that excludes food and energy, climbed to 2.9%, its highest level since February.

On a monthly basis, headline inflation increased 0.2%, slightly below June’s pace, while core inflation rose 0.3%, matching June’s rate. While inflation has ticked higher over the summer, the in-line readings supported expectations that the Federal Reserve may deliver a rate cut in September.

Source: US Bureau of Economic Analysis

Positive Revision to Q2 GDP

The U.S. economy showed stronger-than-expected momentum in the second quarter, with real GDP growth revised up to +3.3%, 30 basis points above the initial estimate and the fastest pace of growth since Q3 2023. The revision reflected stronger investment and consumer spending, which outweighed a downward adjustment to government spending. This better-than-expected data came welcomed as investors look for the green light for rate cuts later this year.

Source: US Bureau of Economic Analysis

Nvidia Earnings

Nvidia stock slipped last week as investors digested its latest earnings report. Revenue and earnings beat expectations, fueled by strong AI demand, but the company offered little clarity on its operations in China, a major potential market and catalyst for growth.

Sales rose 56% year-over-year, slowing slightly in recent quarters but still impressive. Two customers accounted for 39% of revenue in the most recent quarter, underscoring both concentration risk and the strength of its customer base in adopting the latest technologies.

Geopolitical tensions remain a headwind to the company. In April, the Trump Administration blocked Nvidia from selling its H20 chip in China. Since then, CEO Jensen Huang has been in talks with U.S. officials, including potential agreements for the government to take a cut of every sale to customers in China. The company forecasts that China could represent a $50 billion opportunity this year, growing roughly 50% annually if political barriers are removed.

Despite these uncertainties, Nvidia shares are up nearly 30% year-to-date, highlighting the company’s resilience and leadership in cutting-edge technology, despite the geopolitical challenges.

Source: Morningstar

Consumer Confidence

U.S. consumer confidence fell slightly in August, down 1.3 points to 97.4 from 98.7 in July. Appraisals of current job availability declined for the eighth consecutive month, though stronger views of current business conditions helped offset much of the drop.

Confidence fell among consumers under 35, remained stable for those aged 35 to 55, and rose for those over 55. Write-in responses showed increased references to tariffs, continuing to be tied to concerns about higher prices.

Accordingly, consumers’ average 12-month inflation expectations rose to 6.2% in August, up from 5.7% in July but still below April’s 7.0% peak. Overall, confidence and sentiment continue to be a weak spot in the economic data, with indexes remaining well below pre-pandemic levels.

Source: The Conference Board

Summary

Equities touched record highs last week as economic data pointed to economic stability. Second-quarter GDP was revised higher, while July’s personal income and spending data showed healthy demand alongside an expected rise in PCE prices. Nvidia earnings came in strong but underscored geopolitical headwinds, while consumer confidence dipped slightly in August, largely reflecting softer job conditions.

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Thank you,

Joseph M. Maas,
CFA, CFP®, ChFC, CLU®, MSFS, CCIM, CVA, ABAR, CM&AA

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