Cooling Inflation Fuels Market Resilience: Weekly Stock Market Recap for August 8-15, 2025

As a leading Wealth Management firm in Missoula, Mt, we know that staying ahead of market trends is crucial for effective personal financial planning and wealth management. This week's recap highlights a story of steady progress in the face of economic signals, with U.S. stocks showing resilience through modest gains driven by favorable inflation data and anticipation of Federal Reserve actions. While challenges like persistent wholesale price pressures persist, the overall tone points to opportunities for investors focused on long-term growth, whether through 401k benchmarking or diversified portfolios.

Key Takeaways

• Modest U.S. Equity Gains: The S&P 500 rose 0.9%, the Dow Jones Industrial Average climbed 1.7%, and the Nasdaq Composite increased 0.8%, reflecting a positive week amid economic data releases.
• Inflation Cooling Boost: July's CPI came in at 2.7% headline and 3.1% core, aligning with expectations and raising odds for a September Fed rate cut above 80%.
• International Outperformance: Global markets shone brighter, with developed markets (MSCI EAFE) up around 2.3% and emerging markets following suit, aided by a softer U.S. dollar.
• Fixed Income Stability: The 10-year Treasury yield held near 4.3%, with aggregate bonds flat and high-yield options gaining modestly, offering balance in portfolios.
• Long-Term Perspective: The S&P 500 has delivered strong returns—16% over the past year, 121% in five years, 209% in ten years, and 431% over twenty years—turning a $10,000 investment into approximately $53,100 today.

Riding the Wave of Economic Optimism: U.S. Equities in Focus

U.S. stock markets demonstrated resilience, posting gains that pushed indexes closer to recent highs. The S&P 500's 0.9% advance was supported by broader participation beyond big tech, with small-caps, value stocks, and the equal-weighted S&P 500 showing outperformance—a sign of market leadership expanding. Resilient consumer spending, with July retail sales up 0.5%, contributed to the momentum.

Top performers this week included sectors poised for cyclical upside. Health care and communications led the charge, benefiting from steady demand and AI-driven innovations, where AI investments are contributing more to U.S. GDP growth than during the 1990s tech boom. About 80% of Q2 earnings beat expectations, with communications and technology sectors up over 20% year-over-year, bolstering investor confidence.

On the flip side, biggest losers were in energy and certain consumer goods, weighed down by tariff-related cost pressures and volatile input prices. These sectors faced headwinds from ongoing trade adjustments, though the impact remains contained without major escalations.

Global Horizons: Why International Markets Are Stealing the Spotlight

Turning our gaze abroad, international equities outperformed their U.S. counterparts. The MSCI EAFE index for developed markets gained about 2.3%, fueled by hopes for geopolitical resolutions, including potential Ukraine ceasefire progress that lifted European stocks. Emerging markets matched this strength, with opportunities in areas like India amid AI and trade reorientation.

A softer U.S. dollar, down 9% year-to-date against major currencies, played a key role by enhancing the competitiveness of U.S. exports and boosting multinational earnings when converted back home. This dynamic is particularly relevant for clients engaged in wealth management strategies that include global diversification to mitigate domestic risks.

Navigating Fixed Income: Stability in Uncertain Waters

In the fixed income arena, stability was the name of the game. The 10-year U.S. Treasury yield hovered around 4.3%, edging up slightly over the week, while aggregate bond performance remained flat. High-yield bonds, however, saw modest gains of about 0.4%, appealing to those seeking income in a potential lower-rate environment.

With inflation easing gradually—July's PPI marking the quickest wholesale pace in three years but CPI providing relief—expectations for Fed easing could favor longer-duration bonds (7-10 years) for yield potential. Short-term options continue to offer reliable stability.

Winners and Losers: Sector Spotlights from the Week

Diving into specifics, top performers underscored the market's adaptive nature. Homebuilders emerged as a bright spot, with the SPDR Homebuilders ETF outpacing the S&P 500 by 9% in August so far, thanks to dipping mortgage rates. Defense stocks gained amid global tensions, while health care benefited from resilient spending patterns.

Biggest losers included energy firms, dragged by commodity volatility, and autos facing tariff impacts that could raise costs. Consumer goods also lagged as companies navigated higher inputs, though many are adapting through supply chain shifts. These patterns stress the importance of sector rotation in wealth management to capture upside while managing risks.

Looking Ahead: Long-Term Strategies for Enduring Success

As we wrap up this recap, the week's activity reinforces the value of patience and perspective. With cooling inflation creating a supportive backdrop and potential rate cuts on the horizon, markets are handling challenges like sticky services inflation (up 0.4% month-over-month in travel and health) with poise. Globally, stronger international performance suggests diversification remains key.

At Nexus Wealth Management, our Missoula-based team uses these insights to tailor strategies, from 401k benchmarking to holistic personal financial planning. Remember the S&P 500's impressive track record—a 431% total return over 20 years—illustrating how staying invested pays off. If you're ready to align your portfolio with an advisory team that offers bespoke, holistic portfolios, reach out to our team and we'll be happy to connect with you.

About the Author

Robert Montes, CPFA®, is the lead Portfolio Manager at Nexus Wealth Management, a premier financial advisory firm based in Missoula, Montana. With a keen eye for detail, Robert oversees the analysis of market conditions, evaluates emerging economic trends, and crafts tailored wealth management strategies and recommendations designed to guide investors toward achieving their long-term financial objectives. Under his leadership, the team at Nexus Wealth Management serves over 700 households, managing more than 1,100 accounts, and has earned recognition as one of the top-rated wealth management firms in Montana. Beyond the world of finance, Robert is an avid Jiu Jitsu practitioner and a former Army Ranger, bringing the same discipline and resilience to his professional endeavors that he honed in his personal pursuits.