August 25, 2025
S&P futures –0.3% Monday AM after Friday’s sharp rebound, which snapped a five-day S&P losing streak with all major indexes up >1.5% and small caps leading. Cyclicals, housing, meme/short baskets, regional banks, and Bitcoin-linked stocks outperformed. Asia mostly higher (Hang Seng +2%, Shanghai +1.5%), while Europe trades ~0.5% lower (UK closed). Treasuries weaker, yields +1–2 bp after curve steepening Friday. Dollar +0.2%, gold –0.2%, Bitcoin –4.4%, WTI crude +0.7%.
No major shifts post-Powell’s dovish Jackson Hole comments, though tariff-driven inflation, labor softening, and political Fed pressure remain in focus. Fed easing rotations are broadening market breadth but highlight index-level concentration risk. AI remains the dominant theme ahead of NVDA earnings, with renewed debate on capex bubbles and monetization. Tariffs back in headlines as Trump announced a new furniture investigation.
On today’s calendar: July new home sales and Dallas Fed manufacturing. Dallas Fed’s Logan speaks at 15:15, NY Fed’s Williams at 19:15. Key data/events later this week include durable goods, confidence (Tue), GDP revisions, claims, and pending home sales (Thu), and core PCE plus Michigan sentiment (Fri). Treasury supply heavy with $180B in 2-, 5-, and 7-year auctions.
Corporate updates:
- KDP weaker on $18B deal to buy JDE Peet’s.
- WSM, RH pressured after Trump tariff probe into furniture; ETD benefits.
- VRNT surges on report of near-term Thoma Bravo buyout.
- KO weighing options for Costa Coffee.
- SBUX trimming U.S. roasting/packaging to cut costs.
- SPOT signaled further price hikes as new features roll out.
- TPG considering $1.5B sale of XCL Education.
- Databricks to acquire Tecton, expanding AI agent tools.
U.S. equities surged Friday (Dow +1.89%, S&P 500 +1.52%, Nasdaq +1.88%, Russell 2000 +3.86%), snapping a five-day losing streak, with small caps leading gains. Risk sentiment was boosted by Fed Chair Powell’s Jackson Hole speech, which leaned more dovish than expected. He flagged rising downside risks to employment, suggested tariff effects on prices should be short-lived, and noted slowing GDP growth. September rate-cut odds jumped back above 80% during the session and ended closer to 90%. Treasuries rallied with the curve steepening as front-end yields fell ~10 bp. The dollar index slid 1%, gold gained 1.1%, Bitcoin rose 4.1%, and WTI crude edged up 0.2%.
Talking Points
Bullish: Powell’s dovish tilt revived easing expectations, offsetting earlier hawkish remarks from other Fed officials. Flash PMIs showed the strongest manufacturing and hiring momentum since 2022. Retail earnings from Lowe’s, Home Depot, TJX, and Ross underscored resilient consumer demand and off-price strength. Semiconductor momentum held with Analog Devices beating and raising on industrial recovery traction. S&P affirmed the U.S. credit rating, noting tariff revenues as partial fiscal support.
Bearish: AI monetization scrutiny deepened, with an MIT study showing 95% of enterprises see no returns from generative AI spend, while NVDA halted H20 chip production under China pressure. Tariff-driven inflation showed up in PMI data, and jobless claims climbed to the highest since 2021. Retail earnings were mixed, with Walmart, Target, and Coty highlighting margin and traffic challenges. Geopolitical risk lingered with fading Ukraine diplomacy prospects and record-high JGB yields fueling global liquidity concerns.
Sector Highlights
Sector leadership was broad, reflecting the shift in Fed expectations. Consumer Discretionary led with a 3.2% gain, supported by retailers and travel. Energy (+2.0%), Communication Services (+1.9%), Materials (+1.7%), Financials (+1.7%), Real Estate (+1.6%), and Industrials (+1.6%) also outperformed. Technology gained 1.3% but lagged the broader rally. Health Care (+0.8%) and Utilities (+0.5%) were more defensive. Consumer Staples (–0.4%) was the only sector to finish lower, dragged by Walmart.
Information Technology
- NVDA: Instructed suppliers to halt H20 chip production amid China push for domestic alternatives.
- INTU (–5%): FQ4 ahead, but FY26 guidance light on weaker GBSG/Mailchimp.
- WDAY (–2.8%): Q2 beat; FY26 subscription guidance raised via Paradox deal, though organic growth flagged.
- ZM (+12.7%): Q2 revenue and EPS beat, raised FY guidance; strongest growth in 11 quarters.
- INTC: Agreed to sell 10% stake to U.S. government.
Communication Services
- GOOGL (+3.2%): Secured $10B six-year cloud contract with META.
- RBLX (+2.3%): Upgraded to Outperform at Wolfe Research.
Consumer Discretionary
- ROST: Q2 slightly ahead; FY guidance reinstated; noted strong July rebound and BTS momentum.
- BJ (–8.5%): EPS beat but revenue and comps missed; pressured by fuel headwinds despite higher memberships.
- ULTA (+1.8%): Upgraded to Overweight at Barclays on margin expansion potential.
Consumer Staples
- SBUX: Expects bids for China business within two weeks.
Industrials
- AKZOY: Activist Cevian Capital disclosed 3% stake.
Eco Data Releases | Monday August 25th, 2025
S&P 500 Constituent Earnings Announcements | Monday August 25th, 2025
No Constituents Report Today
Data sourced from FactSet Research Systems Inc.
