August 18th, 2025
Stocks Slip as Investors Eye Retail Earnings
Major indexes showed mixed movement overnight, climbing in the early pre-market hours before giving back gains as the market open approached.
Equity markets opened modestly lower Monday as attention turns to this week’s retail earnings, offering a key gauge of consumer health. Health care and consumer staples are leading early gains, while communication and energy sectors lag.
In international markets, Asia mostly advanced overnight, highlighted by Japan’s Nikkei index hitting a record high.
European markets are up ahead of a meeting today where German Chancellor Friedrich Merz, French President Emmanuel Macron, and British Prime Minister Keir Starmer will accompany Ukrainian President Volodymyr Zelenskyy to meet with President Trump to discuss the Russia-Ukraine war.
Last Friday, President Trump met with Russian President Vladimir Putin in Alaska, though no agreement was reached.
Economic Takeaways:
- Preliminary readings suggest mixed trends in services and manufacturing. The S&P Flash U.S. Services PMI is forecast to slip to 54.0 in August from 55.7 in July, while Flash Manufacturing PMI is expected to rise to 50.6 from 49.8.
- With 92% of S&P 500 companies having reported quarterly results, 82% have beaten analyst estimates, delivering an average upside surprise of 8.4%.
- Spot shipping rates for the standard 40-foot containers used to transport cargo worldwide remain in freefall.
- Data from China Friday showed signs of economic weakness. Industrial output fell in July to its lowest level since last November, and fixed-asset investment came in below economists’ forecasts, CNBC reported, citing LSEG data.
- Chicago Fed President Austan Goolsbee called the latest inflation data “a little mixed” in an interview with CNBC on Friday.
- Technically, last week ended weak as selling accelerated in the final half-hour Friday amid pressure on chip stocks and soft consumer sentiment data.
- The broader market remains up nearly 4% since late June, though summer is often a seasonally slow period. Key support for the S&P 500 is its 20-day moving average near 6,366, which held in earlier tests this month.
- Bond yields are higher, with the 10-year U.S. Treasury at 4.33%, still below July’s peak near 4.50%.
- The U.S. dollar is strengthening against major currencies.
- WTI crude is trading lower amid potential impacts from Russia-Ukraine discussions on India’s Russian oil imports.
- The CME FedWatch Tool now shows an 85% probability of a rate cut next month, with 15% odds of no change. Futures markets still price in at least two rate cuts before year-end.
Rate Cut Watch: Eyes on Powell’s Final Jackson Hole Speech
Federal Reserve officials gather this week in Jackson Hole, Wyoming, for their 43rd annual economic policy symposium, with Chair Jerome Powell facing a key dilemma: hold rates steady amid persistent inflation or cut rates after a soft July jobs report. Markets are pricing in a 25-basis-point rate cut in September, and President Trump has urged Powell to act. Investors will be closely watching Powell’s Friday 10 a.m. ET speech for clues on the Fed’s next move.
Inflation remains a central concern, particularly in services, which make up most of the U.S. economy. Tariffs have had only a modest impact. At the same time, July added just 73,000 jobs, with prior months revised lower, raising concerns about labor market strength. Fed officials are split: some emphasize inflation risks, while others highlight weakening employment.
Powell has stressed the need for more data before deciding, noting that the economy faces both inflation pressures and downside employment risks. Markets still expect a September rate cut, though odds have softened after stronger-than-expected wholesale price data.
Powell is also set to present the results of the Fed’s five-year policy framework review, last updated in 2020. The review may adjust the approach to inflation targeting and policy communications, reflecting new risks from supply shocks and more volatile inflation. Investors will watch closely for guidance on interest rates, the labor market, and how the Fed plans to balance its dual mandate of price stability and maximum employment.
Bitcoin Pulls Back After Record Highs
Bitcoin (BTC-USD) fell 2% Monday to just above $115,000 after hitting $123,500 last Thursday, as investors took profits from last week’s rally. Year-to-date, BTC has risen 23%, driven by expectations of Fed rate cuts and corporate treasury purchases.
Ether (ETH-USD) also declined 3% to around $4,350, retreating from recent highs near $4,900. Analysts cite market deleveraging, with over $1.7 billion in long crypto futures liquidated since last Thursday.
The broader market rally has paused, and hopes for a 0.5% Fed rate cut in September faded after hotter-than-expected wholesale inflation data. Investors are watching Fed Chair Jerome Powell’s speech at Jackson Hole Friday for guidance.
“If Powell maintains a ‘wait-and-see’ approach, BTC will likely consolidate between $115,000–$120,000,” said Dean Chen, crypto derivatives analyst. A breakdown could test $112,000, while holding above may prompt a retest of $118,000–$120,000 resistance.
Crypto-related stocks like Strategy (MSTR), Robinhood (HOOD), and Coinbase (COIN) slipped at the open but recouped some losses during early trading.
On the Move
- Novo Nordisk (NVO) jumped 2.9% in early trading after the FDA approved its Wegovy drug to treat metabolic dysfunction-associated steatohepatitis (MASH) in adults with moderate-to-advanced liver fibrosis, CNBC reported.
- GoodRx (GDRX) soared more than 30% in early trading Monday following an announcement that it will begin selling both of Novo Nordisk’s (NVO) GLP-1 drugs—Ozempic for diabetes and Wegovy for weight loss—at a cash price of $499 per month
- CVS Health (CVS) rose 2.8% after UBS upgraded the stock to Buy from Neutral, citing early signs that improvements in the healthcare benefits segment are on track.
- Duolingo (DUOL) climbed 3% pre-market following a KeyBanc upgrade to Overweight from Sector Weight, highlighting multiple growth drivers.
- Tesla (TSLA) slipped 0.8%, extending a three-day losing streak amid light news flow.
- Home Depot (HD) held steady early Monday after strong gains last week ahead of tomorrow’s earnings, boosted by hopes for lower interest rates and positive sentiment in housing and home improvement stocks.
- UnitedHealth (UNH) soared 12% Friday, its largest single-day gain since 2008, after Berkshire Hathaway revealed a 5-million-share stake worth roughly $1.6 billion.
- Solar stocks shone Friday following Treasury guidance on renewable project tax credits under Trump’s budget plan. Names climbing included NextEra Energy (NEE), AES Corp (AES), and SunRun (RUN), which is up 4% this morning.
- Dayforce (DAY) surged 26% pre-market after Bloomberg reported potential buyout interest in the HR software company.
- Bitcoin (/BTC) fell 1.7% early Monday following a record high above $125,000 last week. Related stocks—including Coinbase (COIN), MicroStrategy (MSTR), and Circle Internet Group (CRCL)—also dropped 1–2%.
What’s Ahead
Palo Alto Networks (PANW) reports later today.
The Federal Reserve is set for a working session in Wyoming later this week, culminating with a Friday speech from Chairman Jerome Powell.
Ahead of that, investors are closely watching earnings reports from major retailers including Home Depot (HD), Target (TGT), and Walmart (WMT), alongside new housing data.
Home Depot reports Tuesday, followed by Lowe’s and Target on Wednesday, and Walmart on Thursday.
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