Stock Market Outlook – August 17 2025

Stock Market Outlook entering the Week of August 17th = Uptrend

ANALYSIS
The stock market outlook continues to show an uptrend for U.S. equities, though institutional selling increased again.

The S&P500 ( $SPX ) rose 0.9%.  The index sits ~4% above the 50-day moving average and ~9% above the 200-day moving average.

The market added 2 more distribution days last week, bringing the total to 6 (which is elevated) and dropping the Institutional Activity signal to neutral.

SPX Price & Volume Chart for Aug 17 2025

PERFORMANCE COMPARISONS
Health care ( $XLV ) led sectors higher, while Utilities and Consumer Staples ( $XLU & $XLP ) underperformed.  Materials and Healthcare ( $XLB & $XLV ) regained bullish bias and Energy ( $XLE ) rose to neutral.

S&P Sector Performance from Week 33 of 2025

Small cap value ( $IWN ) outperformed the other styles, while Momentum and Low Beta ( $MTUM & $SPLV ) came away with small losses.

Sector Style Performance from Week 33 of 2025

Despite a choppy week, U.S. equities led assets higher, and Gold ( $GLD ) underperformed.  Gold is also testing bias levels, while the U.S. dollar fell back to bearish bias.

Asset Class Performance from Week 33 2025

COMMENTARY
Last week’s inflation data surprised too the upside; not good for those with hopes of large interest rate cuts.

Headline CPI was the “best” reading, showing now change in year over year readings.  Core CPI increased in July, and that’s on top of an upward revision to June data ( from 2.8% to 2.9% ).

Headline and Core PPI showed sharper increases in inflation readings.  The headline data increased to 3.3%, on top of an upward revision to June data ( from 2.3% to 2.4% ).  Core was the worst, jumping more 1%.

Retail sales showed an increase of 3.9% year over year, down from June;s 4.4%.

And finally, the University of Michigan consumer sentiment survey dropped to 58.6, well below market expectations of 62, due to inflation concerns and higher prices for durable goods ( e.g. furniture, appliances, etc. ).

Data releases this week relate to housing, though all eyes and ears will be on Jackson Hole, Wyoming, for the U.S. Federal Reserve’s annual symposium. Specifically, talking heads will try to assess any changes in the “tone” of Chair Powell’s speech on Friday.

The increase in institutional selling activity ( noted above ) coincides with other traditional technical measures showing an overbought market with bearish divergences developing (e.g. MACD, RSI, etc.).  While it’s not time to panic, it is time to harvest some of those summer gains.

Asset class and sector bias has been volatile as of late, which aligns with the historical trend for August.  Not quite outright rotation, but there was definitely some flow shifts behind the scenes.  With seasonally weak September right around the corner, take a look at those allocations and make sure they still make sense.  Consider adding to positions that are still bullish bias, but oversold.

Best to Your Week!

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Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis, Hedgeye, Stockcharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, TradingEconomics.com

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