August market recap: Rate-cut hopes lift
August market recap: Rate-cut hopes lift
August market recap: Rate-cut hopes lift
09.11.2025
With relative calm on the tariff front, investors in August returned focus to interest rates and potential Fed activity. Like early and mid-2024, equity markets were somewhat confused in trying to decipher if good news for the economy was a cause for celebration or heightened concern about inflation and higher rates.
Stocks up, bonds follow
Fed Chair Jerome Powell signaled he would be open to a rate cut in September by acknowledging downside risks to employment. Inflation numbers reported during the month offered additional context for potential rate adjustments. The Total U.S. Stock Market rose 2.4% in August, with interest-rate-sensitive small caps leading the way. The U.S. Aggregate Bond market gained 1.2%.
Earnings results provided another tailwind. The Q2 S&P 500® earnings growth is tracking toward 11.9%, according to FactSet, up dramatically from estimates below 5% at the start of the quarter. Nvidia’s results have a significant impact on the market. The company posted sales growth of greater than 50%. Shares showed little initial reaction to the results but retreated in the following days and finished lower for the month.
The fear index
One potential concern following four consecutive months of gains for U.S. stocks is investor complacency. The VIX, sometimes referred to as the “fear index,” generally declined throughout the month, reaching levels not seen since before Liberation Day tariff announcements. Also, debit balances in margin accounts have spiked to an all-time high as retail investors grow more confident.
New stakes
During the month, President Trump announced that the U.S. government had converted a roughly $9 billion grant issued under the previously approved CHIPS Act into a 10% stake in Intel. While the government provided loans during Covid, this marks the first time it has taken a significant stake in a meaningful public company since the financial crisis. Though this has been described as a national security safeguard, the move has raised concerns for some about creating a slippery slope which undermines free markets.
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Market stats and data mentioned in the text are sourced from Empower’s internal YCharts, as of September 3, 2025
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Craig Birk, CFP®
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Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.
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