From Tuesday through Thursday, the S&P 500 (Index: SPX) clocked three new record highs during the trading week ending Friday, 15 August 2025. The index however dipped slightly on the week's final day of trading to close out the week at 6,449.80, which was up 0.9% from the previous week's closing value. And as it happens, down about 0.3% from its latest record high of 6,468.54 on Thursday, 14 August 2025.
Headlines involving inflation did the most the move stock prices during the week that was. Tuesday, 12 August 2025 launched the series of new highs with the news U.S. consumer price inflation came in lower than expected. That positive momentum was capped off on Thursday, when the producer price index came in higher than expected.
The inflation headlines drove stock prices mainly because of their effect on the expectations for how much and when the Federal Reserve will be setting interest rates through the end of 2025. The CME Group's FedWatch Tool projects the Fed will cut the Federal Funds Rate by a quarter percent at its 17 September (2025-Q3) meeting. Beyond that date, the FedWatch tool forecasts additional quarter point rate cuts will take place on 29 October (2025-Q4) and 28 January (2026-Q1).
The latest update of the alternative futures chart shows the S&P 500's trajectory is continuing to track along the lower end of the redzone forecast range.
The redzone forecast range is based on the assumption investors would hold their forward-looking attention on the distant future quarter of 2026-Q1 throughout the period it runs. The S&P 500's trajectory however is more consistent with investors focusing their attention on the nearer term quarter of 2025-Q4. We think that focus is related to the uncertainty investors have over how many rate cuts will take place during this final quarter of 2025.
Here are the week's market moving headlines:
- Monday, 11 August 2025
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- Signs and portents for the U.S. economy:
- Oil steady as markets focus on US-Russia talks
- Nvidia, AMD to pay 15% of China chip sale revenues to US, official says
- Bigger trouble developing in Japan:
- U.S. stocks slide as investors brace for a week of key inflation data
- Tuesday, 12 August 2025
-
- Signs and portents for the U.S. economy:
- July CPI: Consumer prices rose 0.2%, just below expectations
- US, China extend tariff truce by 90 days, staving off surge in duties
- Oil prices hold steady as US and China extend tariffs deadline
- Fed minions falling into line with need for rate cuts, Fed Chair facing legal pressure:
- Markets now pricing in three Fed rate cuts after July consumer inflation data
- Jobs data blasted by Trump seen by Fed officials as reason to cut
- Trump cites 'major lawsuit' against Fed's Powell, again urges rate cut
- Bigger trouble developing in China:
- Central bank rate cuts in Australia:
- S&P, Nasdaq notch record closes as CPI data fuels Fed rate cut bets
- Wednesday, 13 August 2025
-
- Signs and portents for the U.S. economy:
- Oil falls as IEA raises supply forecast, investors await US-Russia meeting
- US 30-year mortgage rate dropped last week, refi applications surged
- Fed minions send mixed signals on rate hikes:
- Fed cut seen near certain after inflation data, Bessent comments
- Fed's Goolsbee signals door open to rate cut in fall
- Fed can wait to adjust policy because job market is near full employment, Bostic says
- BOJ minions urged to hike Japan's interest rates, get their house in order:
- Bessent says BOJ is 'behind the curve' on inflation, likely to hike rates, in Bloomberg interview
- Japan's wholesale inflation slows for 4th month in July
- BOJ faces pressure to ditch obscure inflation gauge, clear path to tighter policy
- S&P 500, Nasdaq hit new closing highs on rate cut hopes
- Thursday, 14 August 2025
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- Signs and portents for the U.S. economy:
- US producer inflation heats up as goods, services prices soar
- Oil prices climb 2% to 1-week high as Fed rate cut, Trump-Putin talks loom
- Fed minions push back on call for bigger rate cut:
- Bigger trouble developing in Eurozone, ECB expected to sustain pause in rate cuts:
- Euro zone industry shrinks more than feared in June but GDP holds up
- ECB to hold rates until at least December on stable economic outlook: Reuters poll
- Wall Street ends flat, but S&P hits another closing high as rate-cut bets waver
- Friday, 15 August 2025
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- Signs and portents for the U.S. economy:
- Even economists expect Fed minions to cut rates in September, Fed minions claim they want more inflation data before they do:
- US Fed to cut rates in September and once more this year, say most economists: Reuters poll
- Fed's Goolsbee: want more assurance on inflation to cut in Sept or autumn
- Bigger trouble developing in China:
- China's factory output, retail sales growth slump in blow to economy
- China's new home prices fall 0.3% in July
- BOJ minions get better than expected GDP data and inflation data that backs plan for rate hike:
- Japan's economy expands annualised 1.0% in April-June
- Japan's July inflation rate likely eased but remained above BOJ target: Reuters poll
- Dow ends higher after UnitedHealth gains, other indexes slip on rate cut uncertainty
The Atlanta Fed's GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q2 held steady at +2.5% over the past week.
Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of Federal Reserve officials meeting with a tarot card reader who is advising them on how to set the Federal Funds Rate in September 2025".
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