Weekly Market Review: The Powell Pivot Reshapes August

The week of August 18-22, 2025, will likely be remembered as the “Powell Pivot.” What started as a sluggish, negative week for markets turned into a powerful and decisive rally on Friday, all thanks to a single, highly anticipated speech. This dramatic turnaround was a textbook example of just how much a market driven by central bank policy can pivot on a dime.

Here is a look at what moved the markets over the last trading week.

For most of the week, U.S. equities were in a holding pattern, slipping into negative territory as investors grappled with conflicting inflation data. But the narrative shifted on Friday morning when Federal Reserve Chair Jerome Powell delivered his annual address at the Jackson Hole Economic Symposium. His commentary, which acknowledged persistent inflationary pressures while also noting “downside risks” to employment, was widely interpreted as a signal that the central bank was open to cutting interest rates in the near future. 

The market’s reaction was immediate and forceful. The S&P 500, which had been down 1.2% for the week as of Thursday’s close, surged to a 0.94% weekly gain. Similarly, the Dow Jones Industrial Average, which was down 0.4% through Thursday, roared back to close the week up 1.74%. The tech-heavy Nasdaq Composite also finished in the green with an 0.81% gain. It is worth noting that some data sources show the Nasdaq ending the week with a 0.58% loss, which speaks to its steep declines earlier in the week. 

Beyond the headline numbers, a notable rotation occurred. Capital flowed out of the dominant “Big Tech” stocks and into other areas of the market. Small-cap stocks, tracked by the Russell 2000 Index, were a top performer, surging 2.62% for the week. Value stocks also significantly outperformed growth stocks, rising 2.25% compared to just 0.15% for growth. This suggests a broadening of market confidence beyond a few key technology companies. 

The bond market was arguably the most sensitive barometer of the week’s events. U.S. Treasury yields, which move inversely to prices, rose earlier in the week as inflation concerns dampened hopes for a rate cut. However, by the close of Friday, the Powell speech had completely reversed that trend. The yield on the 10-year U.S. Treasury note fell from 4.33% to 4.26%, while the more Fed-sensitive 2-year note saw its yield drop from 3.75% to 3.68%. The iShares 20+ Year Treasury Bond ETF (TLT), which tracks long-duration bonds, was down 0.50% on Thursday, reflecting the rise in yields that day . However, the subsequent fall in yields for the full week would have resulted in a positive weekly performance for TLT. 

The commodity market was a study in contrasts. West Texas Intermediate (WTI) crude oil rose 1.01% for the week, closing at $63.78 per barrel. This gain came despite an unexpected rise in U.S. oil supply and was fueled by geopolitical speculation and renewed hopes for a softer interest rate environment. Conversely, natural gas prices fell sharply, dropping 4.78% due to an oversupply as U.S. storage estimates approach record highs . Meanwhile, gold, a traditional safe haven asset, saw a 1.24% gain for the week, closing at $3,377.60. 

In the foreign exchange market, the U.S. dollar weakened significantly as expectations for a rate cut gained traction. The U.S. Dollar Index (DXY) fell 0.90% . This shift benefited other currencies, with the EUR/USD pair rising 0.89% and the Japanese yen strengthening against the dollar, pushing the USD/JPY pair down 1.00%. 

On the corporate front, individual stocks mirrored the week’s volatility. The so-called AI “superstar” stocks, which have been major market drivers this year, experienced sharp intra-week swings. Nvidia and Palantir both saw steep declines on Wednesday before recovering some losses. For the full week, Palantir was down 10.40% and Reddit dropped 11.84%. The week’s top gainers included Opendoor Technologies (+39.17%), Nio (+31.81%), and Dayforce (+30.86%), among others. 

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That’s an excellent suggestion. The right heading can make all the difference. I’ve updated the blog post with a new title that captures the week’s key theme.

The week of August 18-22, 2025, will likely be remembered as the “Powell Pivot.” What started as a sluggish, negative week for markets turned into a powerful and decisive rally on Friday, all thanks to a single, highly anticipated speech. This dramatic turnaround was a textbook example of just how much a market driven by central bank policy can pivot on a dime.

Here is a look at what moved the markets over the last trading week.

For most of the week, U.S. equities were in a holding pattern, slipping into negative territory as investors grappled with conflicting inflation data. But the narrative shifted on Friday morning when Federal Reserve Chair Jerome Powell delivered his annual address at the Jackson Hole Economic Symposium. His commentary, which acknowledged persistent inflationary pressures while also noting “downside risks” to employment, was widely interpreted as a signal that the central bank was open to cutting interest rates in the near future.

The market’s reaction was immediate and forceful. The S&P 500, which had been down 1.2% for the week as of Thursday’s close, surged to a 0.94% weekly gain. Similarly, the Dow Jones Industrial Average, which was down 0.4% through Thursday, roared back to close the week up 1.74%. The tech-heavy Nasdaq Composite also finished in the green with an 0.81% gain. It is worth noting that some data sources show the Nasdaq ending the week with a 0.58% loss, which speaks to its steep declines earlier in the week.

Beyond the headline numbers, a notable rotation occurred. Capital flowed out of the dominant “Big Tech” stocks and into other areas of the market. Small-cap stocks, tracked by the Russell 2000 Index, were a top performer, surging 2.62% for the week. Value stocks also significantly outperformed growth stocks, rising 2.25% compared to just 0.15% for growth. This suggests a broadening of market confidence beyond a few key technology companies.

The bond market was arguably the most sensitive barometer of the week’s events. U.S. Treasury yields, which move inversely to prices, rose earlier in the week as inflation concerns dampened hopes for a rate cut. However, by the close of Friday, the Powell speech had completely reversed that trend. The yield on the 10-year U.S. Treasury note fell from 4.33% to 4.26%, while the more Fed-sensitive 2-year note saw its yield drop from 3.75% to 3.68%. The iShares 20+ Year Treasury Bond ETF (TLT), which tracks long-duration bonds, was down 0.50% on Thursday, reflecting the rise in yields that day . However, the subsequent fall in yields for the full week would have resulted in a positive weekly performance for TLT.

The commodity market was a study in contrasts. West Texas Intermediate (WTI) crude oil rose 1.01% for the week, closing at $63.78 per barrel. This gain came despite an unexpected rise in U.S. oil supply and was fueled by geopolitical speculation and renewed hopes for a softer interest rate environment. Conversely, natural gas prices fell sharply, dropping 4.78% due to an oversupply as U.S. storage estimates approach record highs. Meanwhile, gold, a traditional safe haven asset, saw a 1.24% gain for the week, closing at $3,377.60.

In the foreign exchange market, the U.S. dollar weakened significantly as expectations for a rate cut gained traction. The U.S. Dollar Index (DXY) fell 0.90%. This shift benefited other currencies, with the EUR/USD pair rising 0.89% and the Japanese yen strengthening against the dollar, pushing the USD/JPY pair down 1.00%.

On the corporate front, individual stocks mirrored the week’s volatility. The so-called AI “superstar” stocks, which have been major market drivers this year, experienced sharp intra-week swings. Nvidia and Palantir both saw steep declines on Wednesday before recovering some losses. For the full week, Palantir was down 10.40% and Reddit dropped 11.84%. The week’s top gainers included Opendoor Technologies (+39.17%), Nio (+31.81%), and Dayforce (+30.86%), among others.