Investors React to Mixed Inflation Signals:
Stocks rose last week despite conflicting inflation reports as investors remained focused on the Federal Reserve’s upcoming September meeting.
The S&P 500 Index advanced 0.94%, while the Nasdaq Composite Index added 0.81%. The Dow Jones Industrial Average rose 1.74%. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 2.16 %1,2
Source: Bloomberg Finance, L.P. (Performance data normalized 8/8/25 = 0)
Third Gain in Four Weeks
Stocks posted modest losses to start the week as investors braced for July consumer inflation reports. The White House’s executive order on Monday extending the tariff deadline for China by 90 days failed to move markets in the other direction.3
Stocks then staged a two-day rally following the latest Consumer Price Index (CPI) report, which showed July inflation held steady over the prior month—beating expectations. The inflation news led some investors to move into small-cap stocks, with the Russell 2000 Index of small-cap stocks rising 5 % over Tuesday and Wednesday.4
However, markets slipped Thursday as investors dug into the Producer Price Index (PPI) for July, which showed wholesale inflation hit a 3-year high last month; this was the third weekly gain in the past four weeks for each of the three major averages; the S&P and Nasdaq advanced four of the last five weeks.5,6,7
Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab
A Mixed Inflation Story
Inflation continues to give mixed signals, which can unsettle investors who anticipate the Fed adjusting rates at its September meeting.
Last week’s CPI report showed that “headline” (retail) inflation held steady. Stocks rose in response, even though core inflation—excluding volatile food and energy prices—was hotter than economists expected.
Two days later, the PPI report revealed that inflation began to creep into wholesale prices in July. Stocks fell in response as investors processed the conflicting reports.8,9
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1WSJ.com, August 15, 2025
2Investing.com, August 15, 2025
3CNBC.com, August 11, 2025
4CNBC.com, August 13, 2025
5MarketWatch.com, August 14, 2025
6WSJ.com, August 15, 2025
7WSJ.com, August 15, 2025
8CNBC.com, August 12, 2025
9MarketWatch.com, August 14, 2025
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