Weekly Market Commentary - August 18, 2025
Week In Review
Despite headline consumer and producer inflation reports that exceeded consensus expectations,
major U.S. equity indices soared higher as the inflation trend fueled rate cut possibilities and bolstered market sentiment. In the last six months, a period that includes the imposition of higher import tariffs, retail inflation has risen at a modest 1.9% annualized rate. 3 Yes, the Producer Price Index surged 0.9% in July, but much of that increase was due to higher services prices. Goods prices, the category most susceptible to higher tariffs, rose just 1.9% in the last twelve months. The U.S. Treasury yield curve steepened on the inflation news, with some downward pressure on short-term bond yields. The S&P 500 continued to climb the wall of worry and eclipsed an all-time high, moving up +0.9%.
This Week
The financial markets have an insightful economic and earnings calendar. The minutes of the Federal
Reserve’s July FOMC meeting arrive on Wednesday, but investors will be focused on the Jackson Hole Economic Policy Symposium that begins the following day. The earnings season resumes with 16 S&P 500 companies reporting results, including retail bellwethers Home Depot, Walmart, Target, Lowes, and TJX Companies. 4
Portfolio Theme
Momentum factor investing has worked well this year, and retail investors have played follow-the-leader
when it comes to allocating equity capital.As more money chases the stocks that have outperformed, the largest market cap firms get even bigger and this creates market concentration. In fact, the top ten stocks comprise a whopping 40% of the S&P 500 index. The potential implications of stock concentration include firm-specific risk, overinflated valuations, reduced diversification and greater volatility. Simplicity offers direct indexing services with discernable target portfolios such as the equal-weighted S&P 500 or the Russell 3000 index that may help avoid disproportionate 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 John Hancock Investment Management.
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 First Trust.
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.
