U.S. Markets
Stocks posted a solid gain in August as investors eyed the Federal Reserve’s next move with interest rates.
The Standard & Poor’s 500 Index advanced 1.91%, while the Nasdaq Composite rose 1.58%. The Dow Jones Industrial Average led, picking up 3.20%.1
Fed Forward
Stocks advanced in early August as a sluggish jobs report, followed by upbeat inflation news, seemed to crack the door for the Fed to adjust short-term rates.2
Midmonth, markets mostly moved sideways as investors nervously parsed the latest batches of economic news ahead of the Fed’s annual symposium.
The S&P 500 and Nasdaq fell after the Fed released the minutes from its July meeting, which revealed that most Federal Open Market Committee members were more concerned about inflation than the job market.3
Powell Opens the Door
However, markets rebounded smartly after Fed Chair Powell opened the door to a rate move at the Fed’s September meeting. Powell contended that “the downside risk of employment is greater than the upside risk of inflation.”4
Powell’s statement was in sharp contrast to the July meeting minutes and perhaps indicated a shift in the central bank’s thinking. Stocks extended their rally and the S&P 500 closed above 6500 for the first time on August 28.5
As the month came to a close, investors welcomed the second-quarter update from the nation’s most influential AI company. However, stocks were under pressure on the final day of trading as investors appeared to move to a risk-off position with the Labor Day holiday weekend in sight.6
What Investors May Be Talking About in September
All eyes will be on the Fed’s next scheduled two-day policy meeting, which concludes on September 17.
Investors will be watching to see whether the Fed adjusts rates and paying close attention to signals about its direction for the rest of the year and into 2026.
At Jackson Hole, Chair Powell signaled that the Fed now views risks to employment as more pressing than those from inflation—a notable shift in emphasis from earlier guidance.8
Another factor to keep in mind is that Fed Chair Powell’s four-year term as Chairman ends on May 15, 2026. Powell has managed the economy through COVID, a spike in inflation, and supply chain issues.
But part of his legacy will be how he manages short-term rates during his last few months in office.9
World Markets
The MSCI EAFE Index rose 4.06% in August.10
European markets were mixed. Italy (+6.18%) and Spain (+3.74%) posted solid gains while France and Germany lagged behind. The UK’s FTSE 100 rose 1.41%.11
Pacific Rim markets were also mixed. Japan led, tacking on 4.01% while Korea and India were under pressure. China’s Hang Seng Index rose 1.23%.11
The Fed
While the Fed did not hold a formal meeting in August, it did hold its annual symposium, which offered some clues as to its next move on monetary policy.
In his speech, Fed Chair Jerome Powell hinted that the Fed was open to adjusting rates, which took some investors by surprise and led to a sharp rally on Wall Street.21
Powell said, “The downside risk of employment is greater than the upside risk of inflation. “ He explained that the supply of and demand for workers were both dropping, and made the case that some softening in the labor market would act as a check against inflation.22
The Federal Open Market Committee has 12 members who vote on interest rate policy. Its next meeting will be held on September 16-17.
Our blog posts are intended for information purposes only and should not be interpreted as financial advice.
You should always engage the services of a fully qualified financial planner before entering any financial contract.
To discuss engaging the services of Fortitude Financial Planning please email us at info@fortitudefp.ie.
Fortitude Financial Planning Ltd will not be held responsible for any actions taken as a result of reading these blog posts.
1. WSJ.com, August 31, 2025
2. CNBC.com, August 13, 2025
3. CNBC.com, August 20, 2025
4. MarketWatch.com, August 22, 2025
5. CNBC.com, August 28, 2025
6. CNBC.com, August 27, 2025
7. SectorSPDRs.com, August 31, 2025
8. MarketWatch.com, August 22, 2025
9. FederalReserve.gov, 2025
10. MarketWatch.com, September 2, 2025
11. Finance.Yahoo.com, September 2, 2025
12. CNBC.com, August 28, 2025
13. WSJ.com, August 1, 2025
14. WSJ.com, August 15, 2025
15. KPMG.com, August 15, 2025
16. TradingEconomics.com, July 2025
17. Realtor.com, August 21, 2025
18. Tradingeconomics.com, August 25, 2025
19. CNBC.com, August 12, 2025
20. WSJ.com, August 27, 2025
21. WSJ.com, August 23, 2025
22. MarketWatch.com, August 25, 2025
23. SportsBusinessJournal.com, April 10, 2025
24. Parade.com, February 8, 2025
25. SportsPro.com, January 9, 2025
26. NFL.com, July 23, 2025
27. Gallup.com, February 7, 2024
28. NFL.com, July 23, 2025
29. AS.com, February 9, 2025
30. TheWanderClub.com, July 23, 2025
Production