Weekly Market Recap

Week Ending August 22, 2025

🔎 Quick Highlights

  • Fed Chair Powell hints at possible September rate cut → markets rally.

  • Dow Jones surges 846 points Friday, finishing at a record high.

  • S&P 500 edges up 0.3%; Russell 2000 leads with a 3–4% jump.

  • Cyclicals shine (energy, real estate, financials), while tech lags.

  • Oil climbs 1.6%, gold adds 1.1% as yields ease.

  • All eyes now on Nvidia earnings + key economic data this week.

📰 Market Recap

Markets Rally as Powell Hints at Rate Cuts

The Federal Reserve stole the spotlight last week as Chair Jerome Powell used his Jackson Hole speech to signal that a softening labor market may justify easing monetary policy. Investors cheered the dovish tone, with hopes high for a September rate cut.

The week finished on a strong note, capped by a record-setting 846-point surge in the Dow Jones Industrial Average on Friday.

Major Index Performance

  • S&P 500: +0.3% (week), ~10% YTD

  • Dow Jones Industrial Average: +1.5% (record high), ~7.3% YTD

  • Nasdaq Composite: modest weekly gains, ~11.3% YTD

  • Russell 2000: +3–4%, ~5.9% YTD

Sector Rotation: Cyclicals Take the Lead

Markets showed strong breadth as investors rotated into value and cyclical names:

  • Energy (+2.8%), Real Estate (+2.4%), Financials & Materials (+2.1% each), and Industrials (+1.8%) all posted strong gains.

  • Technology (-1.6%) and Communication Services (-0.9%) were the week’s laggards, reflecting some profit-taking in mega-cap tech.

This rotation signals a broadening rally beyond the largest growth names.

Macro and Commodities

  • Treasury yields drifted lower as rate-cut bets strengthened.

  • Oil (WTI) gained 1.6%, supported by resilient demand signals.

  • Gold rose 1.1%, appealing to investors as a hedge amid Fed policy uncertainty.

Market Breadth

  • The S&P 500 Equal Weight Index hit new highs, suggesting gains are spreading across more sectors.

  • The Russell 2000 outperformed strongly, highlighting a resurgence in small-cap, domestic-focused equities.

Looking Ahead

  • Rate Cuts: Futures markets now price in nearly a 90% chance of a September cut.

  • Earnings: Nvidia’s report this Wednesday will be a key sentiment driver for tech.

  • Economic Data: GDP, PCE inflation, consumer confidence, and labor market numbers will help shape expectations for the Fed’s next move.

  • Politics: Investors remain alert after political tensions rose with President Trump’s effort to remove Fed Governor Lisa Cook, sparking central bank independence concerns.

📊 Bottom Line

The U.S. stock market finished last week on solid footing, powered by Fed optimism and renewed breadth beyond tech. With rate cut bets climbing and small-caps outperforming, investors are watching Nvidia’s earnings and economic data closely to see if the rally can extend.