Market Recap - Week of August 25 through August 29, 2025
- Gordon Achtermann, CFP®, CSRIC®, MBA
- Sep 2
- 3 min read
The S&P 500 index edged down 0.1% this week but ended August trading with a 1.9% monthly climb.
The benchmark index closed at 6,460.26 on Friday, the final trading day of the month. While this marked a slight decline from a week prior and snapped its weekly winning streak, the index still recorded its fourth consecutive monthly gain. It is now up 4.1% for the quarter and 9.8% for the year.
Data this week showed US consumer spending rose in July at the fastest pace since March, while the Federal Reserve's preferred inflation metric increased annually to the highest level in five months.
The second estimate of Q2 gross domestic product from the Bureau of Economic Analysis showed the US economy expanded in the second quarter at the fastest pace in nearly two years, amid stronger consumer spending and business investment than previously expected.
The utilities sector had the largest percentage drop of the week, falling 2.1%, followed by a 1.7% drop in consumer staples and a 0.8% slip in industrials. Health care, consumer discretionary, real estate, and technology also edged lower while the materials sector was flat on the week.
The US stock market was closed on Monday, September 1, for the Labor Day holiday.
Last Week’s Economic Reports
New home sales rose to 652k, beating the consensus estimate of 635k.
Consumer confidence fell to 97.4 from 98.7
Headline and core PCE (Personal Consumption Expenditures - the Fed's preferred inflation measure) rose by 0.2% and 0.3% m/m. Core inflation stands at 2.9% y/y, still above the target of 2.0% inflation.
S&P 500 Sector and Stylebox Returns
Thought of the Week
Consumers are often considered to be the engine driving the U.S. economy. However, that has not been the case in recent quarters. In fact, much like the U.S. equity market, technology and AI have lately been the key drivers. In 1H25, on average, consumption was responsible for 0.7% of total economic growth compared to an average of 1.7% from 2000-2024. At the same time, business investment in information processing equipment, software, and R&D contributed 1.1% compared to an average of 0.4%.
Why has the U.S. economy grown more reliant on tech investments to sustain growth? While policy uncertainty has caused consumers to turn increasingly cautious, major tech firms have continued to deploy record levels of capital in order to build out their AI capabilities. This remained a key theme during the 2Q25 earnings season, which was rounded out by Nvidia last Wednesday. The chipmaker was optimistic, expecting roughly $3 to $4 trillion in AI infrastructure spend by the end of the decade.
This shift in economic drivers presents both opportunities and challenges. The broad adoption of AI capabilities could drive significant productivity gains over the next decade. In the short term, however, reliance on secular tailwinds for economic growth, such as AI investment spending, could mask underlying weaknesses in the cyclical parts of the economy. As secular and cyclical forces continue to shape the economic landscape, investors should focus on long-term strategies and diversify into alternative assets to capture tech and AI growth, while safeguarding against potential weaknesses that may lie ahead.
Source: JP Morgan (edited)
Up Next
Next week's economic reports will include August employment data as well as August automotive sales. July construction spending and factory orders will also be reported.
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All the Best,
Gordon Achtermann, CFP®
703-573-7325
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