The week's biggest market moving news came on Friday, 22 August 2025, when Federal Reserve Chair Jerome Powell opened the door to the Fed resuming interest rate cuts. Investors were buoyed by the news, which boosted the S&P 500 (Index: SPX) to 6,466.91 by the close of trading that day, ending the week almost 0.3% higher than it closed out the preceding week.

But to put the news into closer focus, the S&P 500 jumped 1.5% on Friday, having fallen throughout the week, primarily between Tuesday, 19 August and Thursday, 21 August.

The latest update suggests investors reset their forward-looking focus during the week to the more distant future quarter of 2026-Q2 in setting current day stock prices. We find the trajectory of the index is at the lower end of the typical range the dividend futures-based model behind the chart would place it.

The heightened focus on Powell's speech at the Fed's annual retreat to Jackson Hole, Wyoming accounts for the market's sharp reaction on Friday, 22 August 2025. The CME Group's FedWatch Tool indicates investors now anticipate the Fed will cut the Federal Funds Rate by a quarter percent at its 17 September (2025-Q3) meeting. Going forward, the FedWatch tool forecasts additional quarter point rate cuts will take place on 29 October (2025-Q4), 10 December (2025-Q4), and 28 January (2026-Q1).

Should investors shift their time horizon inward to the nearer term, the rally in stock prices could continue. How high stock prices might rise in that event would be determined by how far into the future they might shift their focus. If that doesn't happen and investors stay focused on 2026-Q2, then stock prices will mostly move sideways within a relatively narrow range.

For a significant continued rally, something will need to happen to reset investors' time horizon. That, in turn, will depend on the random onset of new information which the market moving news of the week will document. Speaking of which, here are the past week's headlines:

Monday, 18 August 2025

• Signs and portents for the U.S. economy:
• Oil prices edge higher ahead of Trump-Zelenskiy meeting
• Chief Fed minion has some problems before leaving for Fed summer camp:
• Powell caught between inflation and unemployment as Jackson Hole approaches
• Bigger stimulus, trouble developing in China:
• China to continue stimulating consumption, premier says
• China July aluminium imports surge 38% from prior year
• China’s half-cooked growth plan is going cold
• BOJ minions see positives in US-Japan trade deal:
• Japan says US is not pressuring BOJ for rate hikes, markets not so sure
• Wall Street finished flat ahead of Powell's Jackson Hole speech and retail earnings
• Wall Street ends on muted note ahead of Jackson Hole summit, retailers' earnings
• Trump administration in talks to take 10% stake in Intel, Bloomberg News reports
• Trump eyes US government stakes in other chip makers that received CHIPS Act funds, sources say

Tuesday, 19 August 2025

• Signs and portents for the U.S. economy:
• Oil prices fall on talks to end Russian invasion of Ukraine
• US housing starts tick higher in July, led by apartment construction
• US hikes steel, aluminum tariffs on imported appliances, railcars, EV parts
• Trump's interest rate demands put 'fiscal dominance' in market spotlight
• Fed minions thinking about getting into crypto:
• Fed's Bowman suggests allowing central bank staff to own small amounts of crypto products
• Bigger trouble developing in China:
• China expected to keep benchmark lending rates unchanged
• China's overcapacity crackdown faces litmus test in solar sector
• BOJ minions get message from politician who wants higher interest rates in Japan:
• Japan must raise rates, get fiscal house in order, says veteran lawmaker Kono
• Nasdaq tumbles as Jackson Hole jitters hit tech stocks
• Wall Street ended lower as retail earnings and the Jackson Hole symposium loom

Wednesday, 20 August 2025

• Signs and portents for the U.S. economy:
• Oil prices climb 2% on drop in US crude inventories as investors focus on Ukraine peace push
• Fed minutes show divide within Fed over direction for setting interest rates, President Trump targets two minions he wants to replace sooner rather than later:
• Fed dissenters appeared alone in favoring rate cut at July meeting, minutes show
• Fed minutes highlight split over effects of Trump’s tariffs on inflation
• Trump again attacks Fed chair, says Powell 'hurting' the housing industry
• Trump calls on Fed Governor Cook to resign over mortgage allegations
• China policymakers thinking about getting into crypto:
• Exclusive: China considering yuan-backed stablecoins to boost global currency usage, sources say
• BOJ minion to join Fed minions at their policy summer camp getaway:
• BOJ governor Ueda to travel to Jackson Hole for Fed conference
• ECB minions say US-Eurozone trade deal close to their plan:
• US-EU trade deal not far from ECB's baseline forecast, Lagarde says
• Nasdaq, S&P 500 end lower as investors sell tech, buy less pricey sectors
• Wall Street concluded mostly lower as investors digested retail earnings and Fed minutes
• Nasdaq drops for 2nd day as AI jitters rattle tech investors

Thursday, 21 August 2025

• Signs and portents for the U.S. economy:
• Oil rises 1% on stalled Russia-Ukraine peace talks, strong US demand
• US existing home sales tick up unexpectedly in July
• Fed minions claim no need to rush to cut rates, Fed minions rethinking what they're doing, legal problems developing for Fed minion:
• Fed officials lukewarm on September rate cut as markets await Powell speech
• Fed's Schmid says no urgency to cut interest rates but more data to come
• Fed's expansive experiment in strategy to get a reboot at Jackson Hole
• US DOJ to probe Fed's Cook, urging removal, Bloomberg News reports
• Fed governor Lisa Cook says she will not be ‘bullied’ into resigning
• Justice department calls on Fed to sack governor Lisa Cook
• Bigger trouble developing in China:
• China faces pivotal welfare reform test as court ruling hits jobs, small firms
• Chief BOJ minion not wanting to rush interest rate hikes in Japan:
• BOJ chief's dogged caution tempers board's hawkish instincts
• Signs of recovery in the Eurozone, ECB minions get reason to hold off on more rate cuts:
• Euro zone business activity accelerates in August as new orders grow, PMI shows
• German manufacturing drives modest growth in August, PMI shows
• Surprise uptick in Eurozone activity bolsters case for ECB to hold rates
• Wall Street finished in the red as Walmart weighed on markets and eyes turn to Jackson Hole
• Walmart results show consumer resilience; shares down after recent rally
• Wall Street closes down as investors brace for Powell's speech

Friday, 22 August 2025

• Signs and portents for the U.S. economy:
• Oil prices set to end losing streak as Ukraine peace process stalls
• Canada to remove many retaliatory tariffs on US, Carney says
• Chief Fed minion opens door for Fed to resume interest rate cuts:
• Powell says rates may need to be cut, but Fed to proceed carefully
• Fed rate cut odds rise after Powell's Jackson Hole speech
• Yields drop in response to Powell speech at Jackson Hole
• Powell, citing jobs risk, opens door to cuts but doesn't commit
• Fed's Powell announces policy framework tweaks for changed economic landscape
• Trump 'Will Fire Cook' If She Doesn't Resign After Pulte Drops New Receipts
• Bigger trouble developing in China:
• China's imports of US rare earth ore surge in July
• China tightens grip over rare earth supply quotas
• Bigger trouble developing in the Eurozone:
• Germany falls back into ‘recessionary territory’ as second-quarter GDP revised down
• Dow notched a record close as Wall Street rallied on Powell’s Jackson Hole remarks
• Nasdaq, S&P, Dow rise on Powell's speech at Jackson Hole

There is one potential concern that can upset the future we've described. Should the S&P 500 run into a new market regime, all bets would be off. Changes in market regime is something the dividend futures-based model can identify, but cannot anticipate in advance, even though it can explain upwards of 90% of how stock prices behave otherwise. In terms of modeling how stock prices work, it's the remaining frontier.

The Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 dipped to +2.3% after clocking in at +2.5% in the preceding week.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Federal Reserve official speaking to a group at a summer camp. There is a magical door with a sign that says 'INTEREST RATE CUTS' onstage that the official has opened."