WEEKLY MARKET SUMMARY
Global Equities: US equity markets slipped after hitting new all-time highs during the week, with the S&P 500 and the Dow Jones Industrial Average both ending the session down -0.1%. The Nasdaq Composite also slipped during the week, ending down -0.2%, while US Small Cap stocks finished the week with a slight gain of 0.1%. A potential collapse of the French government sent Foreign Developed stocks -1.9% lower, while Emerging Market stocks slipped -1.5%.
Fixed Income: US Treasury yields were relatively steady during the week, with the 10-Year yield easing slightly to 4.22%. Rate cut odds for September remained high, at nearly 90% according to Fed Funds futures data from CME Group’s FedWatch. Corporate bonds were mixed during the week, with investment grade bonds slipping -0.4% while high yield bond prices ended the week unchanged.
Commodities: US West Texas Intermediate crude oil ended the week slightly higher at $64 a barrel. US energy firms reduced the active rig count for a second consecutive week. Gold prices hit another all-time high, rising above $3,500/oz as the Fed looks poised to cut rates despite hot inflation data.
WEEKLY ECONOMIC SUMMARY
Inflation Data: The Federal Reserve’s benchmark for inflation, the Core Personal Consumption Expenditures (PCE) Index, showed inflation rose 0.3% in July, boosting the annual rate from 2.8% to 2.9%. While the Fed is poised to cut rates, the hot PCE data may spark some internal debate at the next meeting as inflation remains well above the Fed’s 2% target and has accelerated over the last several months. Annualizing the last three Core PCE readings reveals inflation has accelerated and is now trending at 3.2%.
More Fed Shakeups? The resignation of Fed Governor Adriana Kugler has already given President Trump the opportunity to insert a loyalist at the central bank, and now he may exert further influence on the Fed as he seeks to remove Lisa Cook after allegations of mortgage fraud surfaced this week. Trump stated he had fired Cook, but the Fed Governor refused to step down and courts will need to weigh in. President Trump will also get to replace Fed Chair Jerome Powell in 2026, potentially giving him influence over three seats at the Fed. Some Fed officials may be vying for the Chairman role, such as Christopher Waller, who made a strong call for rate cuts and classified inflation as “transitory” in comments this week.
Earnings Update: The world’s largest company by market capitalization, Nvidia (NVDA), capped off earnings season this week, delivering yet another earnings beat on $46.7 billion in quarterly revenue. Shares slipped, however, due to a small miss on data center revenue of $41.1 billion which was below the $41.3 billion estimate. Q3 guidance of $54 billion was also lighter than analysts wanted, but it excludes sales of H20 chips to China, highlighting the uncertainty amidst the constantly shifting tariffs and export controls.
CHART OF THE WEEK
The Chart of the Week is the “Buffett Indicator”, made famous by legendary investor Warren Buffett. The Buffett Indicator is simply a country’s total stock market capitalization divided by its Gross Domestic Product (GDP) and provides an assessment of stock valuations. The Buffet Indicator reached a new all-time high of over 214% this week, providing further support for arguments that stock market valuations have become over-extended. Yet, while markets look pricey and September is a traditionally weak month for the markets, a widely anticipated rate cut from the Fed just might keep the rally going.
