Weekend Update, August 18th, 2025
Climbing a Wall of Worry
Index, Sector, and Asset Performance
Most market indices continued to rally to marginally new record all-time highs. The S&P 500 jumped +1.1% on Tuesday to close at a record high of 6,445, marking its 16th all-time high of 2025 and crossing above the 6,400 threshold. The S&P 500 increased a bit more throughout the week, finishing down -19 on Friday to just about 6450. The S&P 500 index rose +0.9% last week bringing quarter-to-date gains to +4%, and year-to-date growth to 9+.7%.
The Nasdaq Composite saw a stronger performance, soaring +1.4% to a record 21,682 on Tuesday. The tech-heavy index was led by a rally in Apple. The Dow Jones Industrial Average (DIA) added 483 points or +1.1% on Tuesday. For the week, the S&P climbed +0.9%, while the Nasdaq Composite gained +0.8% and the Dow added +1.7%, largely on the back of a string late week rally in United Healthcare as Berkshire Hathaway disclosed a new stake.
Developments between Russia and Ukraine took centerstage on Friday. U.S. President Trump and Russian leader Vladimir Putin met in Alaska, and Trump later described the meeting as “very productive,” though no agreement was reached to resolve a war that has raged for nearly three and a half years. On the tariff front, Trump said on Wednesday he will be speaking with European leaders “in a short while” to discuss possible deals.
Solar stocks jumped late in the week with First Solar (FSLR) and Enphase Energy (ENPH) among the top three gainers on the S&P 500, +11% and +8.1% respectively. The Trump administration released new guidance on eligibility requirements for federal tax credits that were less punitive than the industry had feared.
Economic Indicators and Earnings Commentary
The rally was catalyzed by strong earnings and July inflation data that came in more favorable than expected. The Consumer Price Index rose +2.7% year-over-year in July, falling below the 2.8% consensus forecast. Core CPI, excluding food and energy, rose +3.1% slightly above the 3.0% forecast. Despite the uptick in core inflation, markets saw the data as supportive of Federal Reserve rate cuts. Thursday’s Producer Price Index report showed wholesale inflation above forecasts. PPI increased 0.9% month-over-month, far exceeding the predicted 0.2%, marking the steepest annual climb since February at 3.3%. This hot inflation data cooled some of the rate-cut rally, though the S&P 500.
This week’s chief economic event is Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole focusing on the economic outlook and the Fed’s policy framework. Powell is not expected to address the pressure from the White House on shaping interest rate policy.
Per Goldman Sachs data on 2q25 earnings season:
Earnings Recap. The 2Q 2025 marked by a near-record frequency of earnings beats, showcasing one of the strongest reporting periods in 25 years.
■ Strong Earnings Growth: Aggregate EPS for the S&P 500 grew by +11.8% yoy (vs only a 4% forecast).
■ High Beat Rate: 81% of S&P 500 companies reported a positive absolute EPS surprise.
■ Upward Revisions: The season saw widespread upward revisions to corporate guidance.
■ Projected Deceleration: Expect a deceleration in S&P 500 EPS growth to around +7% in 2h25.
■ Resilient Profit Margins: profit margins proved more resilient to tariffs than anticipated.
■ Mega-Cap Tech Outperformance: The Mag-7 continued had +27.2% yoy EPS growth in 2Q25.
Coming off of its lows, Eli Lilly ( LLY ) announced plans to increase the price of Mounjaro in the UK, starting in September, to align pricing with other developed countries. Shares of Eli Lilly ( LLY ) jumped +12% last week.
The biggest loser on the week was Applied Materials (AMAT) which while it surpassed market estimates for the third quarter; lowered its fourth quarter forecasts due to macroeconomic and policy issues, including its business in China. In one day, the stock dropped -20% giving up its YTD gains.
This week’s earnings calendar is dominated by retail: Walmart (WMT), The Home Depot (HD), Target (TGT), Lowe’s (LOW), TJX Companies (TJX), Ross Stores (ROST), and BJ’s Wholesale Club (BJ) headline the lineup.
The week will also feature reports from Baidu (BIDU), Palo Alto Networks (PANW), Medtronic, MDT), Intuit (INTU), WDAY, Analog Devices (ADI).
Commodities and Currencies
Oil continues melt lower as demand is weak, and OPEC continues pumping to hurt Russian economics.
The US dollar weakened as softer inflation data increased expectations for Federal Reserve rate cuts. Nine out of ten traders were betting on a Fed rate cut in September, driving dollar weakness across major currencies.
Gold is stuck near $3,400/oz.
Bitcoin hit a new ATH at $124,500. Ethereum has become the new must have crypto hitting over $4,700, gaining over 150% in the last 3 months. Flows into Ethereum ETF’s have reached over $1 billion a day.
Oak Harvest Weekly Stock Talk
MOVEing on Up, Climbing a Wall of Worry
Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. The preceding discussion is for informational purposes only. Investing involves risk and no reference to any security listed above should be considered a buy or sell recommendation. Advisory services are provided through Oak Harvest Investment Services, LLC, a registered investment adviser.
