Major Market Indices Rally to Record Highs
The financial markets closed the week of August 11-15, 2025 with impressive gains, marking a significant period for US equities. The S&P 500 (SPY) surged 1.1% on Tuesday to close at a record high of 6,445.76, representing its 16th all-time high of 2025 and the first crossing of the 6,400 threshold. The index maintained momentum throughout the week, achieving three consecutive record closing highs and finishing at 6,466.58 by Thursday.
The Nasdaq Composite (QQQ) delivered even stronger performance, soaring 1.4% to a record 21,681.90 on Tuesday, marking its 19th record of the year. The technology-heavy index continued its winning streak with consecutive record closings through Wednesday. The Dow Jones Industrial Average (DIA) added 483 points or 1.1% on Tuesday, closing at 44,458.61, coming within 0.2% of its first new peak since December.
Inflation Data Drives Market Optimism
The week's market rally was primarily catalyzed by July inflation data that came in more favorable than expected. The Consumer Price Index rose 2.7% year-over-year in July, matching June's rate and falling below the 2.8% consensus forecast. Monthly CPI increased 0.2%, just below the 0.3% gain from June and in line with expectations.
Core CPI, which excludes food and energy, rose 3.1% annually compared to 2.9% in June, slightly above the 3.0% forecast. The monthly core increase of 0.3% represented the largest rise since January. Despite the uptick in core inflation, markets interpreted the overall data as supportive of Federal Reserve rate cuts, with trader expectations for a September rate reduction jumping to over 90%.
However, the optimism was tempered later in the week when Thursday's Producer Price Index report showed wholesale inflation surging well beyond forecasts. PPI increased 0.9% month-over-month, far exceeding the predicted 0.2%, marking the steepest annual climb since February at 3.3%. This hot inflation data cooled some of the rate-cut rally, though the S&P 500 (SPY) still managed to eke out its third consecutive record close.
Cryptocurrency Market Reaches New Heights
The cryptocurrency market experienced unprecedented gains during the week. Bitcoin (BTC.X) scored a new all-time high above $124,500 as the "everything rally" hit fever pitch. The flagship cryptocurrency had been accumulating for several weeks before blasting off to its new record, with the rally coinciding with broader risk-on sentiment in traditional markets.
Ethereum (ETH.X) prices soared near their record levels, reaching above $4,700 and approaching the November 2021 all-time high of $4,860. The ETH surge was driven by increased corporate treasury adoption, with companies adding Ethereum to their balance sheets following the successful Bitcoin treasury model. Ethereum spot ETFs saw record inflows exceeding $1 billion in a single day, underscoring massive institutional demand.
Solana (SOL.X) emerged as another standout performer, smashing through the $200 level and gaining over 25% in the seven-day period as "altcoin season" kicked into high gear. Corporate treasury firms now collectively hold a record 3.4 million SOL tokens, mirroring the Ethereum accumulation wave.
Corporate Developments and Earnings
Technology Sector Leadership
Meta Platforms (META) was among the week's top performers, hitting a record $790 per share and approaching the $2 trillion market capitalization milestone. The social media giant gained 3.2% on Tuesday alone, leading the Magnificent Seven tech stocks higher. Meta's surge came on the heels of strong earnings results and CEO Mark Zuckerberg's aggressive AI talent acquisition strategy, with the company reportedly offering $100-200 million signing bonuses to poach top engineers from rivals like OpenAI and Apple.
Alphabet (GOOGL) stock gained 1.1% despite receiving an unsolicited $34.5 billion bid from AI search startup Perplexity for its Chrome browser. The offer, roughly double Perplexity's own valuation, was seen as a publicity move timed around ongoing federal antitrust proceedings that could force Alphabet to divest Chrome.
AI Infrastructure Boom
The artificial intelligence infrastructure sector saw significant activity, though with mixed results. TeraWulf (WULF) stock exploded 60% on Thursday after securing a massive $3.7 billion AI hosting contract with Fluidstack, backed by Google's $1.8 billion guarantee. The Bitcoin miner-turned-AI infrastructure provider also received an 8% equity stake from Google as part of the 10-year agreement.
In contrast, CoreWeave (CRWV) experienced significant volatility, initially plunging 21% despite reporting triple revenue growth to $1.2 billion. The AI cloud vendor's losses of $290.5 million overshadowed its strong top-line performance, highlighting investor focus on profitability over growth. By week's end, CoreWeave had wiped out 33% of its value in just two days, with the stock approaching long-term support levels.
Currency Markets and Global Developments
Dollar Weakness and Euro Strength
The US dollar weakened throughout the week as softer inflation data increased expectations for Federal Reserve rate cuts. The EUR/USD pair extended its rally toward $1.17 after the soft US inflation data knocked the dollar lower. Nine out of ten traders were betting on a Fed rate cut in September, driving dollar weakness across major currency pairs.
British Pound Momentum
The British pound resumed its upswing, challenging the $1.36 level after UK GDP data showed 0.3% quarterly expansion, slower than previous quarters but still topping consensus estimates. Sterling benefited from both dollar weakness and relatively resilient UK economic data, extending a multi-day winning streak.
Japanese Yen Strength
The USD/JPY pair saw the yen surge against the US dollar after Treasury Secretary Scott Bessent criticized the Bank of Japan for being "behind the curve" on monetary policy. The dollar slipped 0.7% as traders rushed to buy yen in hopes that Bessent's comments would trigger a policy change.
Commodities Update
Gold (GLD) prices remained relatively steady despite Trump's announcement that gold bullion wouldn't be subject to tariffs. The precious metal logged its worst day in three months, declining 1.6%, as risk-on sentiment pulled money away from safe-haven assets. Gold futures fell 2.5% on Monday, having surged late the previous week on reports that Swiss gold bars might face tariffs as high as 39%.
Oil markets showed mixed signals throughout the week, with supply and demand factors creating volatility in crude prices. The energy sector faced headwinds from various geopolitical and economic factors affecting global demand projections.
Market Outlook
The week of August 11-15, 2025 demonstrated the market's sensitivity to inflation data and Federal Reserve policy expectations. The initial rally driven by softer-than-expected CPI data showed investor eagerness to embrace risk assets amid rate cut hopes. However, Thursday's hot PPI report served as a reminder that inflation trends remain volatile and could complicate the Fed's decision-making process.
Looking ahead, the upcoming Jackson Hole Economic Symposium scheduled for August 21-23 will be crucial for providing clarity on the Federal Reserve's policy direction. The potential meeting between President Trump and Russian President Vladimir Putin regarding Ukraine also represents a significant geopolitical catalyst that could impact market sentiment.
The continued strength in technology stocks, particularly AI-related infrastructure companies, suggests sustained investor confidence in the sector's long-term growth prospects. However, the mixed performance of companies like CoreWeave highlights the importance of profitability alongside revenue growth in the current market environment.
The cryptocurrency market's breakout to new highs, coupled with increasing corporate adoption and regulatory clarity, signals a potential new phase of institutional acceptance for digital assets. The success of spot ETFs and treasury strategies by corporations suggests this trend may continue to accelerate.
