To The Moon

The Friday Market.

On Fri, 22 Aug 2023 US market largely closed higher for the week, snapping the few days of decline since the start of week of 18 Aug 2025.

The Dow surges to first record close of 2025, while both S&P 500 and Nasdaq end sharply higher; just not record breaking (again).

By the time market closed for the week: (see above)

• DJIA: -1.89% (+846.24 to 45,631.74).

• S&P 500: +1.52% (+96.74 to 6,446.91).

• Nasdaq: +1.88% (+396.223 to 21,496.535).

The Catalyst.

Unbelievable as it maybe, US Fed Chair Jerome Powell was the catalyst that sparked the Friday stock-market rally Friday, with his Jackson Hole speech.

HIs dovish stance has opened the door ‘of possibility’ to an interest rate cut in September 2025.

The Things Powell Said ?

Powell has indicated that the "balance of risks" is shifting between the Fed’s dual mandate of (1) inflation control and (2) support employment, with the latter — job growth slowing and employment risks mounting.

His speech signaled that the Fed is considering an interest rate cut at the FOMC’s Seotember, citing rising risks to the labour market as a potential reason to ease policy.

However, he stopped short of committing to a cut, emphasizing the Fed's intention to carefully (a) review incoming labour market and (b) inflation data before deciding.

There are many deterrents that may stop a rate reduction in its track:

• Inflation remains above the Fed's 2% target, fueled in parts by tariffs on imports and certain inflation components like shelter and insurance costs.

• This sustained inflationary pressure could compel the Fed to maintain restrictive rates longer than expected.

• Also, uncertainty about (i) tariffs’ duration and (ii) its impact — complicates the inflation outlook.

• This could force the Fed to prioritize price stability over easing measures.

Recent data showing increased hiring efforts and a still-resilient economy also argue against premature cuts.

The Reports Support Powell?

Did US economic reports out this week support Powell’s overall assessment of its dual mandates ? Let’s find out.

The Jobless Claims.

Applications for US unemployment benefits rose last week to the highest level since June and continuing claims climbed, adding to evidence the US labor market is slowing.

(1) The Weekly one.

For week ended 16 Aug 2025, US weekly jobless claims increased by +11,000 to 235,000 vs economists’ estimates of 225,000 vs last week’s 224,000.

The increment is the largest since late May 2025.

A sustained pickup in new filings risks adding to concerns about the labour market after the most recent US non-farm payroll report showed subdued hiring and higher unemployment.

The 4-week moving average of new applications, (that helps smooth out fluctuations from week-to-week), climbed to 226,250, the highest in a month.

(2) The Continuing one.

According to US Labour Department, for week ended 9 Aug 2025, US continuing claims rose to 1.97 million, the highest since November 2021.

Latest data rose by +30,000, the highest level since November 2021.

The latest rise in continuing claims indicates out-of-work Americans are finding it increasingly difficult to find another job.

Economists said the continuing claims trend was consistent with the unemployment rate rising to 4.3% in August from 4.2% in July.

The S&P Purchasing Manager Indexes.

A monthly survey of purchasing managers at both manufacturers and services firms suggested business activity and hiring have picked up pace appreciably this month.

(1) The PMI overall index.

S&P Global's flash US Composite PMI Output Index increased to 55.4 this August 2025, the highest level since December and from 55.1 in July 2025.

** Note: A reading above 50 indicates expansion in the private sector.

According to S&P Global Market Intelligence, Chief business economist, Chris Williamson:

• A strong flash PMI reading for August adds to signs that US businesses have enjoyed a strong Q3 2025 so far.

• Data is consistent with the economy expanding at a 2.5% annualized rate, up from the average 1.3% expansion seen over the first two quarters of 2025.

(2) The Manufacturing PMI.

The improvement came primarily from the manufacturing sector.

The flash PMI surged to 53.3 - the highest level since May 2022 and from 49.8 in July 2025, defying economists' expectations for a second month of contraction.

Manufacturing received a bump from new orders activity, that was the highest since February 2024.

(3) The Service PMI.

Meanwhile, the S&P Global Flash US Services PMI inched lower to 55.4 in August 2025 from the YTD high of 55.7 in July 2025.

Still, it remained firmly above market consensus of 54.2 (polled by Reuters) to extend the period of sharp expansions in the US private services activity.

New business for services providers expanded sharply but remained slightly under last month's growth rate, while sales growth registered the biggest improvement of the year.

Additionally, backlogs of work rose at the fastest pace since May 2022, and the sharper demand for capacity drove firms to take in the largest magnitude of new workers since January.

On the price front, service providers noted that input costs rose at the 2nd-highest pace in over 2 years, driving output charges to rise the most in 3 years.

The Leading Economic Index (LEI).

The Leading Economic Index (LEI) provides an early indication of significant turning points in the business cycle and where US economy is heading in the near term.

The Coincident Economic Index (CEI) provides an indication of the current state of US economy.

US Conference Board Leading Economic Index® (LEI) for July 2025, inched down by -0.1% to 98.7 (2016=100), after declining by -0.3% in June 2025. (see above)

Overall, the LEI has declined by -2.7% over the 6 months between January - July 2025, a faster rate of decline than its –1.0% contraction over the previous 6-month period (July 2024 to January 2025).

The Coincidental Economic Index (CEI).

Meanwhile, US Conference Board’s Coincident Economic Index® (CEI) for July 2025, rose by +0.2% in to 114.9, no revision to June 2025’s reading.

Overall CEI rose by +0.9% between January - July 2025.

This is up from +0.6% over the previous 6 months period.

CEI’s four major components used to determine if US is in recession are:

• Payroll employment.

• Personal income less transfer payments.

• Manufacturing and trade sales.

• Industrial production.

So far, 3 of 4 components improved in July 2025 except industrial production.

In summary, it could be inferred that US current economy shows resilience but it is getting weaker progressively through time.

It also means that what Powell has mentioned at Jackson Hole coincides with what is happening at ground level.

The Coming Week’s Reports.

This leads us into the week of 25 August 2025.

The following reports due to be release will provide better clarify on the state of US economy:

• Tue, 26 Aug 2025 - US Consumer confidence.

• Thu, 28 Aug 2025 - US Weekly jobless claims.

• Thu, 28 Aug 2025 - US Gross domestic product (GDP) first revision.

• Fri, 29 Aug 2025 - US Personal consumption expenditure (PCE).

• Fri, 29 Aug 2025 - US Consumer sentiments.

Will US market become jittery (again) on the run up to PCE report release OR will Fed chair Powell speech continues to drive US market higher this week ? Only time will tell…

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

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• Do you think US market will be “jittery” again until Friday when inflation report is out ’?

• Do you think US economy is slowing down in Q3 2025 and affecting US market sentiments ?

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