Weekly Market Sparks 8/25/25

Rusty Vanneman

— 2 min read

Talking Points for The Week That Was and The Week Ahead

Executive Summary Sparks

  • Last Week: Fed Chair Powell’s Jackson Hole speech leaned dovish, suggesting rate cuts could be on the horizon. Bond yields fell and equities strongly rallied to fresh highs.
  • The Week Ahead: Key data releases include New Home Sales, Durable Goods, Q2 GDP (2nd estimate), and the Fed’s preferred inflation gauge, Core PCE.
  • Market Wisdom: At record highs and near record valuations, diversification matters more than ever.

Sparks from the Week That Was

  • Market Performance: After four straight down days, the S&P 500 finished the week higher thanks to Powell’s dovish tone. Small- and mid-cap indices outperformed, while large-cap growth lagged. Energy, real estate, financials, and materials led sector gains. Treasuries rallied, sending yields lower.
  • Economic Data:
    • Housing: Existing Home Sales ticked up but remain low versus history, constrained by high prices ($422,400 median) and mortgage rates. Supply fell to 4.6 months, the tightest since 2016. Tough for prices to fall given that supply.
    • Starts & Permits: Housing Starts surged to 1.43 million units (best since December 2023), led by multi-family. But Building Permits slumped to their weakest pace since June 2020. Again, doesn't look like supply is going to increase soon.
    • PMIs: U.S. Manufacturing jumped to 53.3—its highest since May 2022—defying expectations of contraction. Services moderated but remained in growth territory. India’s services PMI hit a record high of 65.6.
  • Sentiment & Confidence: Market sentiment improved following Powell’s speech, with futures pricing in a near 90% chance of a September rate cut.
  • Bond & Credit Markets: Treasury yields dropped post-Jackson Hole. Credit spreads remain historically tight, suggesting markets are still pricing in economic perfection.
  • Other Sparks: Big Tech continues outsized capex spending on data centers. However, parallels are being drawn to the dot-com era, where massive investment didn’t immediately translate to productivity gains.

Sparks for the Week Ahead

  • Economic Data: Watch for New Home Sales (Mon), Durable Goods Orders (Tues), the second Q2 GDP estimate (Thurs), and Core PCE, Income & Spending (Fri).
  • Fed & Policy: Markets will be sensitive to Fed commentary as investors weigh the probability of a September cut.
  • Markets & Earnings: NVIDIA earnings will be closely watched for signals about AI momentum and its impact on market leadership.

Sparks of Market Wisdom

The S&P 500 is sitting at all-time highs, with credit spreads near record tights. That combination reflects extreme optimism. When markets are priced for perfection, risks often lie beneath the surface. This is precisely when diversification—not concentration—is your best defense.

The discipline to stay invested matters most when volatility eventually returns. And when optimism runs hot, staying diversified protects investors from surprises. As always, the long-term winners are those who stay invested, stay diversified, and stay disciplined.

Quote of the Week

“First, players have to learn it. Then they’ll start to live it. Finally, players will defend it.” — Matt Rhule (regarding team culture)

Invest Well, Be Well.
Rusty Vanneman | rustysbridge.com
Listen to my new podcast: Invest Well, Be Well https://podcasts.apple.com/us/podcast/invest-well-be-well/id1827014645

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