Weekly Market Commentary - August 25, 2025
Week In Review
The S&P 500 erased four consecutive days of losses as market sentiment was energized by the
increased odds for interest rate cuts later this year. Speaking at the Jackson Hole Economic Policy Symposium on Friday, Federal Reserve Chairman Jerome Powell implied that a weakening labor market could be the tipping point for the Fed’s monetary policy stance. Powell noted a “shifting balance of risks” in the context of the Fed’s dual mandate, boosting the chances for a September Fed rate cut above 91%. 3 Investor sentiment found additional support from several second quarter retail earnings reports that demonstrated resilient consumer spending. Bond prices rose across the curve. As a result, the 2-year U.S. Treasury yield sank by seven basis points, closing at 3.68%, while the 10-year U.S Treasury yield fell by the same amount, moving from 4.33% to 4.26%. Improving market breadth and sector rotation was evident in the S&P 500, with rate-sensitive and defensive sectors such as energy, real estate, utilities, consumer staples, healthcare and financial services advancing. Despite evolving stagflation risks, the S&P 500 registered a +0.3% gain.
This Week
The economic and earnings calendar could reawaken market volatility. With a titanic 8% weighting in
the S&P 500, Nvidia is priced for perfection. Nvidia will release earnings on Wednesday and the results could be a bellwether for AI infrastructure and broader technology valuation metrics. The Personal Consumption Expenditures Price Index arrives on Friday. Given recent Fed policy remarks, the inflation update could rattle markets.
Portfolio Theme
The S&P 500 is too dependent on the performance of the top 10 stocks. When the concentration level
exceeds 24%, there is a high probability the equal-weighted bottom 490 will surpass the top 10 over the next 5 years. 4 Simplicity offers direct indexing services of the equal-weighted S&P 500 that may help avoid acute concentration risk in popular firms or sectors.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from the CFA Institute & Hartford Funds.
1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.
2 Index Statistics: P/E Ratio – Displays the forecasted P/E ratio of the representative index ETF. Yield - Dividend-per-share divided by current share price. Table statistics are updated weekly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.
3 CME FedWatch Tool.
4 CFA Institute.
Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
