Financial insights for the week ending August 22, 2025
For the week ending August 22nd, the S&P 500 rose by 0.27%, the NASDAQ was down 0.58%, the Dow Jones Industrial Average increased by 1.53%, and the Russell 2000 inflated by 3.30%.
This past week was dominated by speculation leading into Fed Chair Jerome Powell’s remarks at the Jackson Hole symposium. Markets assumed the Fed would push back against September rate cut expectations, given that inflation data has been creeping higher. However, this was Powell’s first public address since last month’s labor reports showed a notable slowdown in job growth. Both the slowdown and the inflation pressures are being attributed more to tariffs and the disruptive effects of AI than to a traditional weakening of the economy. When Powell spoke on Friday, his comments were brief but telling: he noted that the Fed may need to revisit its interest rate policy in light of the softer labor data. While this was not a confirmation of a September cut, investors interpreted it that way on Friday, and as of this writing markets are pricing in an 83% chance of a rate reduction at the Fed’s meeting in three weeks.
Next week will be shaped by two major events. First, on Wednesday, Nvidia, now the largest company in the world and representing nearly 8% of the S&P 500 by weight, will release its earnings. Nvidia has become the backbone of the artificial intelligence boom, with its microchips driving much of the sector’s growth, and its results are expected to have a significant impact on overall market sentiment. Then, on Friday, the PCE inflation report, the Federal Reserve’s preferred gauge, will be released with expectations of 2.9%. If the reading comes in at 3% or lower, it could reinforce expectations for a September rate cut. However, a surprise to the upside above 3% would challenge that outlook and could test the market’s confidence.
For This Week’s Financial Tip of the Week: Don’t Confuse the S&P 500 with Diversification. Today, just five companies (Nvidia, Microsoft, Apple, Amazon, and Google) make up about 30% of the S&P 500. That means owning *just* the S&P 500 is not the same as being diversified because so much of its performance depends on only a few very large companies. With Nvidia’s earnings coming up this week and the PCE inflation report on Friday, market moves may be driven by a small number of stocks rather than the whole market. For long-term investors, the lesson is clear: build real diversification across different sectors, company sizes, and even asset classes. A market this top heavy makes it more important than ever to spread your risk.
Enjoy your day! Come back next Saturday for our latest commentary. We are here to answer any of your financial questions.