August 21, 2025
Since the S&P 500 tiptoed to all-time highs on August 13th, the market has been consolidating and trending lower. Momentum is fading, and we may be witnessing the early stages of a short-term double top pattern. However, that formation only becomes significant if the index breaks the neckline around 6,228. If that level is breached, the projected downside target would be approximately 6,023—coinciding with a minor gap left in June. This would represent a pullback of about 6.9% from the all-time highs, which aligns with the type of correction I’ve been anticipating for late August into September.
Aside from ongoing weakness in the housing data, this week’s primary focus is on the Federal Reserve. The minutes from the last FOMC meeting were released last Wednesday and didn’t contain any major surprises. As expected, two members dissented, calling for a rate cut. While the Committee continues to see risks to both of its mandates, it remains more concerned about inflation and keeping longer run inflation expectations anchored.
Personally, I believe it’s time the Fed shifts its focus toward the employment side of the mandate. Core CPI year-over-year is currently at 3.1%, but that figure is heavily influenced by base effects. The annualized six-month figure is actually closer to 2.2%, which is roughly in line with the Fed’s target. In my view, it's time to begin cutting rates.
Chair Powell delivered remarks on Friday at the Jackson Hole symposium—something I’ll cover in more depth this Friday. Historically, this meeting has had an inconsistent market impact. Sometimes it delivers major surprises (cue the infamous 8-minute speech in 2021 that arguably kicked off the bear market), and other times it's just academic theory.
📅Looking Ahead: Key Economic Data Releases
- Tuesday: Durable Goods Orders and Consumer Confidence
- Thursday: Second estimate of Q2 GDP (expected to remain unchanged at 2%)
- Also: Initial Jobless Claims – Keep an eye on this, as continuing claims have been gradually rising.
- Friday: Core PCE – the Fed’s preferred inflation gauge
- Expected to tick higher on an annualized basis to 2.9%
- Monthly reading at 0.28%, which isn’t ideal
- The six-month annualized figure would land just shy of 3.2% if expectations are met
I’ll be closely monitoring interest rates and broader market movement to determine whether this recent weakness in equities continues.
📡Join us live on Facebook this Friday at 12:30 PM for more insights and analysis.
– HPK Provident Advisors
Disclaimer:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts may not develop as predicted.