August 25th, 2025
Markets Open Mixed as Investors Weigh Powell’s Rate-Cut Signals and Look Ahead to Key Data, Nvidia Earnings
Stocks opened the week on a cautious note after Federal Reserve Chair Jerome Powell reignited risk appetite Friday with comments suggesting interest rate cuts could be on the horizon. While Powell’s dovish tone gave equities a boost late last week, the optimism began to fade Monday morning as major indexes, Treasuries, and cryptocurrencies slipped in early trading. Investors now turn their attention to a busy week of economic data, highlighted by inflation, housing, and growth figures—with Nvidia’s (NVDA) earnings standing out as the centerpiece.
The upbeat reaction Friday sent the Dow Jones Industrial Average to its first record high of 2025, while the S&P 500 came within striking distance of its own all-time closing peak. The index rose 1.5% for the session, tech stocks rebounded from recent weakness, and small caps surged nearly 4% as hopes for lower borrowing costs fueled risk-taking. Analysts noted that the gains also reflected persistent “buy the dip” behavior among retail investors.
In international markets, Asia finished mostly higher overnight, led by Hong Kong’s Hang Seng index and China’s Shanghai index, both of which reached new highs for the year. European equities opened slightly lower Monday, even as Germany’s key business climate indicator rose for the eighth straight month, reaching its highest level in more than two years. The data suggests continued optimism among German companies, but broader market sentiment remains cautious amid lingering macroeconomic concerns.
Economic Takeaways:
- Bond yields are up, with the 10-year U.S. Treasury yield at 4.29%, though the benchmark rate remains below its July peak near 4.50%.
- Sales of new single-family homes in the U.S. declined in July, following a substantial upward revision to June’s sales pace, highlighting a housing market that continues to struggle under the weight of elevated mortgage rates. The Commerce Department’s report on Monday reinforced economists’ expectations that the housing slowdown could persist through the remainder of the year.
- The U.S. Commerce Department is set to release July’s Personal Consumption Expenditures (PCE) inflation data on Friday. Economists expect the headline PCE figure to remain steady at an annualized 2.6%. Core PCE, which strips out more-volatile food and energy components, is forecast to tick slightly higher to 2.9%, up from 2.8% in June. While both measures remain above the Federal Reserve’s 2% target, they provide important signals for the central bank’s policy direction.
- At last week’s Jackson Hole Economic Policy Symposium, Fed Chair Jay Powell emphasized that certain inflationary pressures—particularly those related to tariffs—may prove temporary, representing one-time price shifts rather than sustained trends. He also noted that emerging downside risks to the labor market could justify adjustments to the Fed’s policy stance.
- Financial markets have responded by pricing in expectations for two additional cuts to the federal funds rate later this year, likely beginning in September, followed by an anticipated three more reductions in 2026. Lower interest rates would reduce borrowing costs for both businesses and consumers, providing support for economic activity and corporate profits. Investors will be closely monitoring the PCE report as a key gauge of inflation dynamics and a potential catalyst for Fed action.
Intel Flags Potential Risks from U.S. Government’s 9.9% Stake in Securities Filing
Intel warned Monday that the U.S. government’s newly acquired 9.9% stake in the semiconductor giant could create risks for its business, including potential impacts on international sales and limitations on securing future government grants.
The disclosure appeared in a securities filing outlining updated risk factors, following the government’s decision to convert $11 billion in previously awarded grants into an equity position in Intel. The move represents one of the latest examples of extraordinary government intervention in corporate America under President Donald Trump, raising questions about how the ownership stake could affect Intel’s global operations and strategic flexibility.
In a post on Truth Social early Monday, Trump said the government paid “ZERO” for Intel, adding, “I will make deals like that for our Country all day long.”
“I will also help those companies that make such lucrative deals with the United States,” Trump added.
“I love seeing their stock price go up, making the USA RICHER, AND RICHER.”
Oil Prices Extend Rally as Fed Signals Looming Rate Cuts
Oil prices climbed on Monday, building on last week’s momentum, as a move above key technical thresholds fueled further gains. The rally, which began after signals from the Federal Reserve that rate cuts may resume soon, pushed crude benchmarks to multi-week highs.
West Texas Intermediate rose as much as 1.7%, touching its strongest level in nearly three weeks, while Brent crude advanced beyond $68 a barrel. The upward momentum followed remarks from Fed Chair Jerome Powell, who suggested in a Friday speech that the central bank could lower interest rates as early as the September policy meeting. Traders interpreted the comments as supportive for energy demand, with expectations that looser monetary policy will stimulate economic activity and bolster oil consumption in the U.S.
Furniture Stocks Tumble as Trump Signals Potential Import Tariffs; U.S. Manufacturers See Modest Gains
Furniture retailers came under pressure Monday after President Donald Trump announced plans for a new tariff investigation into imported furniture, sparking fresh concerns across the sector.
Shares of Wayfair (W), RH (RH), and Williams-Sonoma (WSM) all fell sharply after Trump posted late Friday on Truth Social that his administration would launch a “major Tariff Investigation on Furniture coming into the United States.” Trump added that the review would conclude within 50 days and that furniture imports would be subject to new tariffs at a rate “yet to be determined.”
The uncertainty rattled investors, sending Wayfair down as much as 7%, RH off nearly 6%, and Williams-Sonoma sliding almost 3% in Monday’s session. The declines built on losses from late Friday after the president’s initial remarks.
Meanwhile, companies with a larger domestic manufacturing footprint managed to buck the sell-off. La-Z-Boy (LZB) rose close to 1%, while Ethan Allen Interiors (ETD), which manufactures roughly 75% of its furniture in North America, advanced more than 1%.
The potential tariffs come at a challenging time for furniture sellers, who have struggled with sluggish demand tied to a weak housing market and tighter discretionary spending. “There’s no question the higher-end market is stronger than mass,” Wayfair CEO Niraj Shah said earlier this month on the company’s earnings call. He described the broader furniture market as “flat to down low-single digits” and suggested it is “bumping along the bottom” rather than showing meaningful signs of recovery.
On the Move
- Bitcoin (BTC) tumbled nearly 5% early Monday, reversing some of Friday’s 4% gain, and traded at levels not seen in over a month.
- Crypto-related equities mirrored the decline: Coinbase (COIN) and MicroStrategy (MSTR), both of which jumped roughly 6% Friday, dropped 2% to 3% in premarket trading. While the exact catalyst for the pullback remains unclear, some reports suggest that a major cryptocurrency holder may have been liquidating positions.
- Keurig Dr Pepper (KDP) slid 4.9% after announcing plans to acquire Dutch coffee giant JDE Peet’s for $18 billion, a deal the company called an opportunity to create a global coffee powerhouse. CNBC noted that declining sales in Keurig’s U.S. coffee division—particularly from pods and coffee makers—have pressured overall revenue growth.
- Semiconductors also drew attention. Intel (INTC) rose 2% after the U.S. government disclosed late Friday that it now holds a 10% stake in the company, receiving 433.3 million shares of common stock. Meanwhile, Nvidia (NVDA) gained less than 2% Friday, ending a recent losing streak, though investors appeared cautious ahead of the company’s earnings report Wednesday. Other chipmakers saw a stronger rebound: Intel led with a 7% gain, while Palantir (PLTR) and Oracle (ORCL) clawed back from prior losses.
- The furniture sector was under pressure, with Wayfair (W) falling more than 7% and RH (RH) and Williams-Sonoma (WSM) also retreating after Reuters reported that the Trump administration could impose higher tariffs on imported furniture. Conversely, domestic manufacturers benefited: La-Z-Boy and Ethan Allen Interiors saw modest gains as investors anticipated the potential advantage of U.S.-based production.
- The “Magnificent Seven” tech stocks rebounded Friday after a rough week, led by Tesla (TSLA) with a 5% gain. Microsoft (MSFT) rose less than 1%, trailing the group. Uber (UBER) drifted 1% lower ahead of the open after Wedbush flagged slower ride-hailing traffic trends.
- Financials and transports were among Friday’s top performers amid expectations that potential Fed rate cuts could stimulate the economy. Airlines, automakers, banks, and homebuilders all benefited. The Nasdaq Bank Index (BANK) jumped 4%, while the Dow Jones Transportation Average ($DJT) gained 3%. Shipping companies also rallied: FedEx (FDX) climbed 5%, and United Parcel Service (UPS) rose 2.8% on hopes of stronger demand tied to lower interest rates.
- Homebuilder stocks and related suppliers saw notable upside, with Whirlpool (WHR) advancing 6% and Home Depot (HD) rising 4%. Small-cap stocks outperformed larger peers, as reflected in the Russell 2000® Index (RUT), which surged 3.9% Friday. The rally was underpinned by expectations that lower rates could ease borrowing costs for smaller firms and boost financial sector strength, although the index remains below late-2024 peaks and far from its November 2021 record close.
What’s Ahead
This week’s trading calendar is packed. Data began Monday with July new home sales at 10 a.m. ET, followed by a full schedule of Treasury auctions, including 3- and 6-month bills.
The key release comes Friday with the July Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge. In the meantime, all eyes will be on Nvidia’s earnings report due Wednesday after the close, a potential make-or-break moment for the tech sector following its recent pullback.
Heading into the news, Nvidia’s value is about 8% of the S&P 500’s market capitalization, the highest of any stock going back to 1981, according to CNBC.
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