Market Recap Aug 11-15 2025: Gains Amid Inflation Crosscurrents
Stocks rose for the week as investors balanced inflation surprises, resilient consumer data, and growing confidence in Fed easing.
TL;DR
S&P 500 and Nasdaq up ~1 %; Dow up 1.7 % but just shy of record territory.
Russell 2000 surged 3.1 %, leading large-caps by widest margin since April.
CPI steady, but PPI hotter than expected at 3.3 %.
Retail sales solid; consumer sentiment weakened as inflation expectations rose.
Bitcoin touched $124k before retreating to $117k; still up ~26 % YTD.
Futures market points to a Fed rate cut in September; all eyes on Jackson Hole.
Weekly Market Recap
U.S. Equities: Modest but Broad Gains
The S&P 500 and the Nasdaq advanced around 1 %, notching their second straight week of gains and their sixth positive week in the past eight. The Dow Jones Industrial Average added 1.7 % but ended just shy of record levels, unable to match the S&P and Nasdaq which have already pushed to fresh highs. Small-caps were the standout story, with the Russell 2000 surging 3.1 %, its strongest relative performance against large-caps since April.
Inflation Conundrum: CPI vs. PPI
Inflation data kept markets on edge. The Consumer Price Index showed July inflation steady at a 2.7 % annual rate, in line with forecasts. Core CPI rose 0.3 % month over month, its highest pace since January, largely driven by services. Meanwhile, the Producer Price Index delivered a bigger surprise, jumping 0.9 % for the month and 3.3 % annually, the sharpest rise in five months. The hotter-than-expected PPI raised concerns about rising business costs that could eventually feed into consumer prices or pressure profit margins.
Retail Sales and Consumer Sentiment
Retail sales grew 0.5 % month over month in July, meeting expectations but down from June’s upwardly revised 0.9 %. Control group sales, a key input to GDP, also rose 0.5 %. Consumer sentiment, however, weakened for the first time in four months. The University of Michigan’s preliminary August index fell to 58.6 from 61.7 in July, with households citing growing concerns about inflation. Year-ahead inflation expectations climbed to 4.9 %, up from 4.5 % the prior month.
Small-Cap Surge
Investors rotated into smaller companies, driving sharp midweek rallies of 3 % and 2 % on Tuesday and Wednesday. By week’s end, the Russell 2000 closed 3.1 % higher compared with a 1 % gain in the S&P 500, marking a decisive shift in sentiment toward small-cap stocks.
Bitcoin’s Ride
Bitcoin provided its usual volatility. The cryptocurrency briefly surged to a record above $124,000 on Thursday before pulling back to roughly $117,000 by Friday afternoon. For the week, the move netted out to modest gains, leaving Bitcoin up nearly 26 % year-to-date.
Bonds and Rate-Cut Outlook
Treasury yields moved with inflation data. Early in the week, yields slipped following the CPI release, then rebounded as PPI surprised to the upside. The curve steepened, with long-term yields edging higher. Futures markets, however, continued to price in a September rate cut from the Federal Reserve, with additional cuts possible in October and December. Investor focus now turns to the Fed’s annual Jackson Hole symposium beginning August 21, where Chair Jerome Powell is set to deliver a highly anticipated address.
Global Markets Roundup
Europe: The STOXX Europe 600 gained 1.18 % on easing trade tensions and rate-cut optimism. France’s CAC 40 rose 2.33 %, Italy’s FTSE MIB added 2.47 %, and Germany’s DAX advanced 0.81 %. UK GDP rebounded 0.4 % in June, while the eurozone saw industrial output drop 1.3 % in June, exceeding forecasts. German investor confidence also weakened, with ZEW’s index sliding to 34.7.
Japan: The Nikkei 225 surged 3.73 % and the TOPIX rose 2.76 % to record highs, lifted by stronger-than-expected Q2 GDP growth of 1.0 % q/q annualized, resilient corporate earnings, and easing U.S.-China trade tensions. The yen strengthened modestly, while speculation grew about potential Bank of Japan tightening later this year.
China: Mainland shares gained after the U.S. and China agreed to extend tariff pauses by 90 days. The CSI 300 rose 2.37 % and the Shanghai Composite added 1.70 %. Economic data was softer, with retail sales growth slowing to 3.7 % y/y in July, industrial output up 5.7 %, and fixed asset investment up 1.6 % year-to-date—each below expectations.
Earnings Wrap-Up
Earnings season continued to reinforce the bullish backdrop. Of the 459 S&P 500 companies reporting Q2 results, 69 % beat on revenue and 81 % exceeded EPS estimates. Aggregate revenue growth is tracking at 6.0 % y/y, while EPS growth is running at 11.3 %. The Communication Services sector has been a standout, with 44 % earnings growth, driven by Meta and Alphabet.
Sector Performance and Commodities
Health services, health technology, and communications led the week’s gains, while utilities, producer manufacturing, and industrial services lagged. Oil prices fluctuated on supply data and geopolitical speculation, ultimately ending slightly lower. Gold pulled back as risk appetite returned, remaining within July’s range.
Bitcoin and Crypto Beyond BTC
Altcoins rode the wave of optimism, with Ethereum briefly jumping more than 12 % midweek after its 21 % surge the prior week. Profit-taking set in toward the end of the week, but sentiment across the crypto complex remains positive.
Conclusion
The week of August 11–15 showcased the push and pull between inflationary pressures and market optimism around Fed easing. Stocks advanced modestly, small-caps surged, and Bitcoin flashed volatility before settling higher. With mixed inflation data in hand, investors now turn their attention to Jackson Hole, where central bankers may provide clarity on the policy path for the rest of 2025.