August 17, 2025
Volume 12, Issue 33
Weekly Recap
Domestic equities moved higher last week, largely driven by some favorable economic data that helped fuel bets that the Federal Reserve would lower short-term interest rates at its next meeting in September. Small-cap stocks led the way, as the Russell 2000 outperformed the S&P 500 by the widest weekly margin since April. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all advanced, with the latter two notching record highs midweek before pulling back modestly by Friday’s close. Tariff and trade news generally took a back seat to economic data and rate cut speculation for much of last week, although Monday brought news that the U.S. and China had agreed to extend the deadline for higher tariffs for another 90 days while a broader deal is negotiated.
On Tuesday, the Bureau of Labor Statistics reported its highly anticipated July consumer price index data. The report showed that headline inflation cooled modestly in July, with month-over-month inflation dropping to 0.2 percent from June’s reading of 0.3 percent, driven by declines in grocery and energy costs. However, core inflation – which excludes volatile food and energy prices – accelerated to 0.3 percent from 0.2 percent in the prior month. This was close to in line with consensus estimates and pushed the year-over-year measure up to 3.1 percent, the highest since February. Notably, much of the increase was due to services costs, while tariff-impacted categories saw mixed readings.
Stocks rallied and expectations for a September rate cut jumped following the CPI report, as traders seemed to take the lack of a sharp, tariff-driven acceleration in price pressures as a sign that the Federal Reserve will be able to lower borrowing costs at its next meeting.
Later in the week, however, the BLS reported that its producer price index – a separate measure of inflation that gauges price increases at the wholesale level – reaccelerated in July after holding steady in the prior month, rising 0.9 percent compared with estimates for around a 0.2 percent increase. As with consumer prices, services costs drove the overall increase. The report sent stocks lower at the open on Thursday, although most indexes ultimately recovered and finished the day close to even. The probability of a September rate cut also declined following the report, according to the CME FedWatch tool. Elsewhere, the Census Bureau reported that retail sales rose 0.5 percent month-over-month in July, led by a rise in spending at motor vehicle and parts dealers, while June’s reading was revised upward from a 0.6 to a 0.9 percent gain. Control group sales – which exclude several categories and feed into the gross domestic product calculation – also increased by 0.5 percent in July.
The week’s economic calendar wrapped up with the University of Michigan’s preliminary reading for its August Index of Consumer Sentiment, which unexpectedly dropped to 58.6 from July’s reading of 61.7. The month-over-month decline was largely driven by “rising worries about inflation.” Consumer expectations for year-ahead inflation rose to 4.9 percent, up from 4.5 percent in July. U.S. Treasury securities generated little excitement last week, with short-term yields decreasing marginally while long-term yields increased modestly. Yield curve movement was driven by the week’s economic data releases, particularly the hotter-than-expected PPI report on Thursday.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time
In the News
A key measure of underlying inflation rose in July as businesses grappled with President Trump’s tariffs, although the overall increase was most likely not significant enough to deter the Federal Reserve from lowering interest rates at its next meeting. The Consumer Price Index, a common measure of inflation that shows the change in prices for select goods and services over time, increased 2.7 percent year-over-year in July and ticked up 0.2 percent from June, according to a Bureau of Labor Statistics report released on Tuesday. The report indicated that the index for shelter, which has jumped 3.7 percent since July 2024 and 0.2 percent from last month, was the “primary factor” for the overall CPI increase. Meanwhile, the CPI excluding two of the more volatile indexes, food and energy, increased 3.1 percent in July from last year and 0.3 percent since June.
The Producer Price Index – which measures the amount producers receive for goods from customers – increased 0.9 percent in July, according to a Thursday report from the Labor Department’s Bureau of Labor Statistics. The increase was the largest in a single month since June 2022 and exceeded economists’ expectations of 0.2 percent. The increase likely reflects producers’ passing on the costs of President Trump’s tariffs to consumers.
The Treasury Department reported on Tuesday in its daily assessment of outstanding federal debt that the U.S. national debt has surpassed $37 trillion. In January 2020, the nonpartisan Congressional Budget Office projected the debt would only hit $37 trillion in the 2030s. The national debt has increased 60 percent since that report was released only five years ago, when the debt totaled $23.2 trillion.
More than 700 ETFs launched last year, including ones that hold crypto or make leveraged bets on individual stocks like Nvidia.
Coffee roaster Todd Carmichael explained how President Trump’s tariffs will dramatically raise prices on that precious black nectar.
At least one thing about the markets is totally predictable: fees predict performance. It’s an almost perfect stairstep from the cheapest funds to the priciest and it doesn’t matter how long the period is. In fact, the longer the trailing period stretched, the wider the outperformance margin grew between the average cheapest fund and the average priciest fund, with the other groups following suit. Japan’s stock market has finally set a new record high for the first time since 1989 when an asset-price bubble popped, ushering in decades of economic stagnation.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here.
- Lessons from Labubu (Owen Lamont)
- Diminishing Returns for University Endowments (Burton Malkiel)
- Social Security Is Turning 90. Here Are 6 Myths About It That Won’t Go Away. (Mark Miller)
- A Practical Guide to Fixing the Jobs Data Problem (Nir Kaissar)
- Investment Philosophy Statement: A Way out of the Underperformance Cycle? (Mark Armbruster)
This is the best thing I’ve read recently. The best thing I heard. The ugliest. The saddest. The smartest. The most important. The most disappointing.Fleetwood Mac at 50. Twenty years after Katrina. Embodied pleasures. Unintended consequences. Radioactive wasp nest. Chili’s. Forensic ornithology.
The most disliked food in America is liver, hated by 40 percent of Americans. That’s a higher “hate” share than the 39 other foods tested. Other widely hated foods include anchovies (36 percent), sardines (35 percent), tofu (29 percent) and squid (29 percent). The poll also revealedthat men don’t like eating their vegetables; they were more likely to hate or dislike Brussels sprouts, cauliflower, spinach, and broccoli compared to women. On the other hand, bananas are loved by 50 percent of Americans and hated by only 3 percent.
“The words are mostly still in there somewhere, stuck in the back corners of the bottom drawers of my memory, in that way where you couldn’t write them down on a blank sheet of paper, but if the music starts playing, they seem to materialize in your mouth, line by line, right before it’s time to sing them out loud in the car.” ~ Linda Holmes of NPR (on the new HBO Billy Joel documentary)
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets.
