Market Gains Coincide with Geopolitical Talks and Inflation Watch
Market Recap for the Week of August 17, 2025
The US stock market had another positive week, rising about 1%. The Dow Jones Industrial Average, one of the three major US indexes investors track, hit an all-time high. While the market was reaching new highs, President Trump met with Russian President Putin in Alaska to discuss the conflict in Ukraine. As of now, it doesn’t appear that any agreement was reached on a ceasefire.
In economic news, we received two important pieces of inflation data this week: CPI (Consumer Price Index) and PPI (Producer Price Index). The CPI rose only 0.2% for the month of July. The market reacted positively to this news, with small-cap stocks leading the way for the day.
The PPI data, released on Thursday, showed a 0.9% increase for July—a significant move in the wrong direction. The concern is that if producer prices rise, those cost increases eventually flow through to consumers. A sharp jump in the PPI suggests we could see a similar rise in the CPI. This would not be good, as the last thing the economy needs is another spike in inflation. Hopefully, this increase in the PPI was just a one-off and not the start of something larger.
“The Dow reached an all-time high, but rising producer prices remind investors to watch inflation closely.”
Chart of The Week
This week’s chart comes from JPMorgan’s Guide to the Markets. It shows how long different portfolios have historically taken to recover from market declines. Notice the first two bars, which represent a stock market drop of 10%. Both the all-stock portfolio (aggressive) and the 60/40 portfolio (moderate) recovered in about the same amount of time. This might lead one to question the effectiveness of a moderate portfolio. However, look at the column that shows 20% drops: the moderate portfolio recovered its losses in less than a year, while the aggressive portfolio took almost two years.
Bottom line: the shorter your time horizon, the more a moderate portfolio should be considered, as it has the potential to recover losses in a much shorter period of time.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Time in months is calculated based on trading days between drawdown and the subsequent recovery.
Guide to the Markets – U.S. Data are as of June 30, 2025.
