I was looking forward to watching the Ryder Cup this weekend, but by mid-morning it was clear things were going to get ugly fast. At least there’s good football on tomorrow.
Let’s talk about the week that was.
📊 Weekly Market Recap
- S&P 500 return Year-to-date were approximately 13.21%
- S&P 500 return over the past month were approximately 2.50%
- S&P 500 return over the past 7 days were approximately -0.31%
This Week in the Markets- 3 Things to know
- AI Super-deals Take Center Stage – Nvidia and Oracle deepened their AI infrastructure partnership while OpenAI and CoreWeave inked a $6.5 billion expansion (bringing total to $22.4 billion) in agreements to lock in massive capacity. These aren’t just splashy announcements, they’re billion-dollar commitments that show how serious the AI infrastructure race has become. The focus is no longer on single companies but on ecosystems of alliances that can guarantee scale and reliability. Demand for chips and GPU capacity is proving almost insatiable, making the space look unstoppable in the short term. But these valuations in AI stocks assume the wild growth will continue for a long time, meaning the risk is that momentum may be running ahead of fundamentals. Investors now face the big question: is this a durable AI “arms race” or the frothiest part of the cycle?
- Valuations Start to Crack Under Pressure – The S&P 500 dropped for three straight sessions this week, despite GDP data pointing to a still-healthy economy. The real issue is inflation – sticky service costs and wages that won’t come down as quickly as hoped. Equity multiples across tech and growth remain well above their historical averages, and with Treasury yields climbing, the math gets harder to justify. The three-day slide showed how quickly sentiment flips when valuations stretch too far against a tough macro backdrop. If inflation cools, markets may get relief, but stubborn price pressure could mean a rockier 2025. For now, investors are bracing for the year that looks less like smooth sailing and more like a reset for overheated sectors.
- Intel Rebuilds with New Contracts – Intel surprised markets this week by announcing a string of new supply and foundry deals. These contracts are aimed at positioning Intel as a critical player in the AI supply chain, especially as demand for chip capacity surges. Bulls see this as a chance for Intel to finally execute a long-awaited turnaround and regain credibility. Skeptics, however, point to the company’s history of over promising and under delivering. Still, the deals buy Intel time and momentum, giving it a rare opportunity to prove it can deliver at scale. Whether this is the start of a sustainable comeback or just a short-term boost is what Wall Street will be watching closely.
The Fed’s Dilemma & the Growth Paradox
The economy is decidedly mixed right now. On one hand, parts of the economy are still humming along as consumers keep spending, and GDP surprised to the upside. On the other, cracks are showing in the labor market, and inflation hasn’t fully cooled. The Fed is in a bind: cut rates too soon and risk reigniting inflation, wait too long and risk stalling out jobs. That’s the “growth paradox” in plain terms the economy is just strong enough to keep the Fed cautious, but not strong enough to make cutting rates an easy call.
Markets are reflecting that same tension. At the start of the week, traders were bracing for a fast rate-cut cycle. Then Fed comments and a few unexpected data points hit, flipping the script in a matter of 24 hours. Bond yields jumped, stocks stumbled, and the old “good news is bad news” rule kicked back in.
The Commerce Department’s August PCE inflation report, released today, added another sprinkle of data in the week. Headline PCE rose 0.3% month-over-month and 2.7% year-over-year, which was the highest since February but right in line with expectations (which is good for now) while core PCE, the Fed’s preferred gauge, cooled slightly to 0.2% on the month and held steady at 2.9% annually. That mix suggested underlying price pressures are still there, but not accelerating fast enough to throw markets off balance. For the Fed, that’s both a relief and a headache, the data doesn’t demand emergency action, but it also doesn’t give the green light for a swift rate cut pivot.
Even after 3 red days, the report was enough to spark a slight relief rally, with the Dow, S&P 500, and NASDAQ all closing higher today. The fact that “as expected” numbers can swing sentiment this much shows how hypersensitive markets have become, hanging on every decimal point. Right now, it’s less about whether inflation is high or low and more about whether it’s surprising. If the data matches the script, investors breathe easier; if it doesn’t, the market convulses. Layer on the issue of narrow breadth, where a few mega-cap names are still carrying the indexes, and the picture gets even shakier. That concentration leaves the rally feeling top-heavy and fragile, showing true volatility when sentiment shifts.
All of this underscores how closely the Fed’s tightrope mirrors the market’s. If inflation flares again, their credibility takes a hit. Until one side of that trade-off clearly wins, every Fed speech, data release, or press conference just adds to the whiplash. For now, there’s no clean resolution. The Fed’s path is cloudy, growth is stubborn, and inflation remains sticky, leaving investors stuck in the same waiting game for the rest of 2025.
S&P 500 SECTOR SNAPSHOT- Past Week
Top Movers In the Market This Week
Education Courses Are Coming
I’ve mentioned this to a few of you in passing, but now that it’s finally ready to go live I’m happy to share some company news that you might find useful. Starting next week we’ll be releasing on-demand courses covering some commonly asked about topics (such as starting a business, or buying your first rental property). I’ll have more details in next week’s letter but if you have a particular subject you’re hoping to cover just let me know and I can add it to the list.
Tap here if you need to set up any time to meet with me.