August 25-30: Stock Market Outlook & Strategy

Market Moves: How Powell’s Dovish Shift Sparked a Stock Surge

The U.S. stock market kept its upward momentum during the week of August 18-August 22, 2025, despite a shaky start early in the week. The real turning point came on Friday, when Jerome Powell’s dovish comments ignited a rally, pushing stocks higher and reigniting optimism about upcoming rate cuts.

Right after Powell began speaking, stocks jumped, then settled into a steady rhythm for the rest of the day. The market wiped out most of its earlier losses as investors embraced the idea of two full rate cuts before year’s end.

Friday’s gains were impressive: the S&P 500 climbed 1.44%, and the Nasdaq rose 1.46%.

Weekly Comparative Performance

Source: Ki-Wealth Research, Stock Market Data

So what exactly did Powell say that flipped the market’s mood?

Before his remarks, the odds of a 25-basis point rate cut in September stood at 70% in premarket trading on August 22. By the close, that number had jumped to 83%. For December, expectations also shifted dramatically: before Powell spoke, thechances were 96% for a 25bps cut, 70% for 50bps, and 24% for 75bps. By day’s end, those odds had risen to 99%, 84%, and 37%, respectively.

This swing essentially restored confidence to levels seen before recent inflation reports sparked uncertainty about the Fed’s path. That clarity proved a boost for stocks.

Powell’s message touched on several key points. He acknowledged the risk that tariffs could cause persistent inflation but judged it unlikely. More importantly, he flagged growing downside risks in the labor market that justify easing monetary policy.

He reassured investors that long-term inflation expectations remain well anchored, and the Fed won’t let temporary price jumps spiral into entrenched inflation. Powell recognized the delicate balancing act ahead but signaled that the Fed’s restrictive rate stance might need to loosen as economic growth slows and labor market pressures ease.

In a notable shift, Powell moved away from the Fed’s 2020 framework centered on average inflation targeting, favoring a more flexible strategy that adapts to evolving economic conditions. He pointed to cooling consumer spending, slower GDP growth, and a softer labor market as signs the economy is recalibrating.

This acknowledgment of mounting risks and a more adaptable approach comforted investors, fueling the rally and reinforcing expectations that the Fed is preparing for eventual rate cuts.

The market reaction was clear: the Russell 2000 surged 3.11% for the week, signaling a rotation into small-cap stocks. The Dow Jones led among large caps with a 1.55% gain, buoyed by rate cut hopes. Meanwhile, the Nasdaq slipped due to weakness in tech, especially AI-related stocks like NVIDIA.

The S&P 500 ended the week modestly higher, erasing earlier losses thanks to Friday’s strong finish.

Sector-wise, energy stocks soared, driven by geopolitical tensions and a sharp drop in U.S. crude inventories. Real estate gained ground on falling yields and growing rate cut expectations. Financials and industrials rose on signs of economic resilience and rotation into cyclical sectors. Information technology lagged, down 1.49%, weighed down by concerns over AI chipmakers.

Comparative Weekly Performance by Sector

Source: Ki-Wealth Research

Treasury yields tumbled on Friday, with the two-year yield dropping 11 basis points and the 10-year falling 7 basis points. This decline supported rate-sensitive sectors like real estate and financials, adding fuel to the market’s optimistic mood.

In sum, Powell’s remarks shifted the narrative, turning cautious uncertainty into hopeful anticipation — a move that clearly energized the markets as August closed out.

Key Economic Data: August 25 – August 29, & Its Impact on the Market

The last week of August is shaping up to be a crucial period for the stock market, setting the tone for early September. On August 25, investors will focus on new residential sales data in the U.S. Expectations point to an increase in July sales to 690,000 units, up from 627,000 in June. While the rising home inventory—up nearly 25% year-over-year—gives buyers more options, homes are staying on the market longer, and regional price drops hint at a market in transition.

The same day brings the Dallas Manufacturing survey, which is anticipated to show some contraction, adding to the cautious sentiment.

Tuesday, August 26, will bring the July Durable Goods Orders report, likely signaling a slight decline that reflects restrained business spending. Consumer Confidence data will also be released, expected to edge up modestly, though still held back by a cooling labor market and stock market volatility.

Thursday, August 28, holds perhaps the most significant data release: the second estimate of U.S. Q2 GDP. Growth is forecasted to slow to 1.6%, down from 2.3% in Q1, driven by weaker consumer spending and business investment amid ongoing tariff uncertainties. Then on August 29, attention turns to Core PCE inflation data, with a forecasted rise to 2.9% year-over-year from 2.8% in June. Signs of tariff-driven inflation are beginning to show, but the Federal Reserve has indicated it will tolerate short-term inflation bumps for now.

Key Economic Data to Watch during the Week of August 25 – August 29, 2025

These data points could shape market moves in several ways:

• Investor optimism for a Fed rate cut in September remains high, bolstered by Chair Powell’s dovish remarks at Jackson Hole. This outlook could buoy sectors sensitive to rates, like technology and real estate.
• The Core PCE inflation figure will be closely watched. If inflation stays in line with expectations, markets may continue to rally; a surprise increase could temper hopes for easier monetary policy.
• Slowing GDP growth and cautious consumer sentiment may strengthen arguments for monetary easing but also raise questions about the economy’s underlying momentum.
• Earnings season kicks off with major reports from companies like Nvidia. Strong earnings could fuel positive sentiment, especially in tech stocks.
• Depending on the data, investors might rotate toward defensive sectors if economic signals disappoint or stick with growth-oriented stocks if rate cuts and earnings reports encourage risk-taking.

NVIDIA Earnings Preview: How It Could Move the Tech Sector

The week of August 25–29 is shaping up to be a critical one for technology, AI, and semiconductor stocks, with NVIDIA’s earnings report scheduled for Wednesday, August 27, after market close. NVIDIA has a strong track record of exceeding earnings expectations, and this quarter looks no different. Analysts forecast a 48.3% year-over-year jump in earnings per share to $1.01, alongside a striking 53.1% revenue increase to $46 billion for fiscal Q2 2026.

Despite ongoing market uncertainties, tariffs, and geopolitical tensions, NVIDIA’s stock has surged 30.9% year-to-date, far outpacing the broader market. Market sentiment remains largely bullish, supported by a Put/Call ratio of 0.71, signaling optimism, though the open interest ratio at 0.94 suggests some cautiousness. Implied volatility sits at 47.7%, pointing to expectations of significant price swings post-earnings, likely impacting the tech sector on Thursday, August 28.

NVIDIA continues to push the boundaries of AI and physical computing. Recently, it unveiled Cosmos Reason, a 7-billion-parameter vision-language model designed for robotics and physical AI applications. The company also introduced new infrastructure tools like Cosmos Transfer-2 for synthetic data generation, neural reconstruction libraries for lifelike 3D simulations, and the RTX Pro Blackwell Server alongside DGX Cloud to streamline robotics workflows.

Further breakthroughs highlighted by NVIDIA Research include the Video Pose Engine (ViPE) for 3D video annotation, differentiable rendering for precise 3D reconstruction, and AI-generated material textures that enhance virtual environments’ realism. These advances position NVIDIA beyond data centers, expanding its reach into robotics, autonomous vehicles, and industrial simulation markets.

NVIDIA’s Growth Landscape and Margin Outlook: A Strategic Overview

NVIDIA’s Data Centersegment remains the powerhouse of its revenue, contributing over 80%, propelled by AI infrastructure expansion, strong demand from hyperscalers, and widespread adoption of the Blackwell GPU architecture. This segment is expected to surge to $200 billion in 2025 and reach $300 billion by 2026, driven by innovations such as the Blackwell and Rubin chip architectures, AI Factory systems, and significant sovereign AI investments alongside hyperscaler capital expenditures.

Meanwhile, the Automotive & Robotics segment stands out as the fastest-growing area, with an anticipated 80% year-over-year growth by Q2 2026. Key growth drivers include NVIDIA’s Halos safety systems, expanding autonomous vehicle collaborations with partners like Toyota and Aurora, and the Isaac platform, which serves as a foundation for humanoid robot development.

The Gaming segment continues to experience steady, albeit moderate, growth. However, the focus is shifting increasingly toward AI and enterprise solutions, with new GPU launches such as Blackwell Ultra potentially offering a short-term uplift.

Professional Visualizationis gaining momentum, supported by advances in simulation, digital twins, and enterprise adoption of RTX-powered workflows. Notably, NVIDIA has agreed to share 15% of revenue from H20 chip sales to China with the U.S. government, enabling the resumption of exports. Should China’s share rise to 25%, this could boost revenues by over 10%.

NVIDIA’s global AI ecosystem is broadening through strategic partnerships with governments, including Saudi Arabia and Taiwan, as well as healthcare institutions like Mayo Clinic and Illumina, further cementing its cross-sector influence.

Analysts largely anticipate continued robust growth in NVIDIA’s earnings per share (EPS) and revenue. EPS is projected to climb to $1.30 in Q2 of fiscal year 2027 from an estimated $1.01, while revenue is expected to increase from $46 billion to $52 billion.

That said, Ki-Wealth believes that investors should be mindful of a moderate-to-high chance of declining operating and profit margins in the third and fourth quarters of fiscal 2026. This margin pressure stems not from weakening demand but from a mix of strategic investments, intensifying competition, and geopolitical challenges.

Key Factors Impacting Margins:

1. Blackwell Chip Production Scale-Up
   NVIDIA is ramping up production of its Blackwell AI supercomputers, which carries substantial upfront manufacturing costs. CFO Colette Kress has indicated that gross margins will dip to the low 70% range during this period, falling from 78.4% in Q1 2025 to 70.6% in Q1 2026. Margins are expected to recover later in the fiscal year, but Q3 and Q4 will likely still reflect transitional cost pressures.
2. Heightened Competitive Pressures
   Competitors such as AMD, Broadcom, and custom chip initiatives by Microsoft, Amazon, and Google are challenging NVIDIA’s pricing power. Particularly in AI inference workloads, which require less computing power, these alternatives are gaining traction and eroding NVIDIA’s dominance.
3. Export Restrictions Affecting China Sales
   China previously made up more than 20% of NVIDIA’s data center revenue, but U.S. export controls have halved those sales. While NVIDIA has regained a license to export, it must now share 15% of revenue from Chinese sales with the U.S. government, which weighs on profitability.
4. Supply Chain and Tariff Challenges
   Ongoing geopolitical tensions and tariffs are driving up logistics and compliance costs, especially for high-end chips, contributing to further short-term margin compression.

In sum, NVIDIA’s growth trajectory remains strong, anchored by innovation and expanding markets, but its near-term profitability will face headwinds from strategic scaling, competition, and geopolitical complexities.

NVIDIA: Historical EPS versus Revenue

Source: NVIDIA reports, Ki-Wealth Research

If NVIDIA surpasses expectations, it could ignite a rally in the tech sector, particularly among AI-focused companies, reinforcing NVIDIA’s leadership in AI infrastructure and potentially lifting major indices like the NASDAQ. On the other hand, given the sky-high expectations and a recent trend of narrowing earnings beats, even a slight miss or cautious guidance could spark short-term volatility, with concerns over export-related losses and margin pressures weighing on investor sentiment.

This earnings report won’t just be about numbers—it’s a key moment to gauge the future trajectory of AI and semiconductor innovation, with ripple effects across the technology landscape.

Navigating NVIDIA’s Earnings: A Smart Strategy for Traders and Investors

As NVIDIA’s earnings approach, investors with long-only portfolios should keep it simple—hold steady and avoid sudden moves. But for active traders looking to capitalize on potential price swings, Ki-Wealth suggests a strategy designed for both opportunity and protection: the Calendar Call Spread Risk Reversal.

Here’s how it works:

• Buy a long-dated call option (think January 2026, strike $180) to capture upside gains.
• Sell a short-dated call option (September 2025, strike $180) to offset some cost.
• Sell a put option (September 2025, strike $160) to finance the trade and potentially buy shares at a discount.

Why now? Implied volatility is high ahead of earnings, making short-term options pricey. This setup is built to thrive when that volatility drops after the announcement. If NVIDIA’s stock climbs, your long call reaps the rewards. If it dips, the put you sold might get you shares at about a 12.5% discount.

For traders seeking a balance of upside potential, income generation, and downside protection, this strategy offers a smart way to navigate the earnings season with controlled risk and solid opportunity.

Trading Strategy on NVIDIA Ahead of Earnings Release on August 27, 2025

Source: Ki-Wealth analysis

Earnings to Watch This Week

Below, we’d like to highlight the most prominent earnings reports for the week.

Monday: BMO

Tuesday: OKTA, MDB, BOX, PVH

Wednesday: KSS, ANF, WSM, SJM,NVDA, SNOW, CRWD, HPQ, URBN, FIVE

Thursday: DG, BBY, TD, BURL, DKS, OLLI, MRVL, DELL, ULTA, AFRM, AMBA, GAP

Friday: BABA

Trading Insights for the Week of August 25 – August 29, 2025

As we approach the final week of August 2025, Ki-Wealth offers a detailed outlook to help investors navigate the market’s expected fluctuations. Historically, this period tends to bring heightened volatility and often signals the start of aseasonal slowdown as Septemberapproaches. This pattern has been evident in recent years—between 2022 and 2024, the S&P 500 regularly experienced pullbacks during this time, driven by profit-taking and lingering macroeconomic uncertainties.

Looking at August 2025 so far, the S&P 500 has delivered mixed signals: it reached a high of 6,481.34 on August 14 but recently closed at 6,395.78 on August 20, down from early-month lows near 6,212.69. The trend suggests a subtle drift downward after peaking mid-month.

From a technical standpoint, Ki-Wealth’s analysis highlights several critical levels that traders should watch closely. Immediate resistance lies between 6,279 and 6,353, with a major resistance mark at 6,427, which represents the 52-week high. On the downside, immediate support ranges from 6,204 to 6,130, while major support levels sit at 6,023—coinciding with a Relative Strength Index (RSI) threshold of 30%—and 5,939, the 50% retracement from the recent 13-week high and low.

The RSI itself is currently signaling caution. It’s diverging negatively from price action, a sign of growing bearish momentum. Key RSI levels to monitor include 50% at around 6,247, 30% near 6,023, and a deeper 20% level at approximately 5,735. This divergence raises the risk of a market correction, especially if macroeconomic data disappoints or if sector rotation accelerates.

Fibonacci retracement analysis further supports this cautious stance. The 38.2% retracement from the April 7 low to the August 15 peak lands near 5,852, which closely aligns with a 10% correction target at about 5,833.

Given these factors, Ki-Wealth’s investment strategy for the week focuses on balancing caution with opportunity. At the beginning of the week, do not chase the stocks, take a wait-and-see attitude, and wait for NVIDIA’s earnings release. The remarks and comments delivered by the CEO of NVIDIA will be critical for the technology sector with high AI exposure. The recommendation is to prioritize fundamentally strong stocks, especially those with upward earnings revisions.

In the short term, traders should exercise restraint. The RSI divergence combined with seasonal weakness suggests potential for a pullback, so aggressive buying is not advised until support levels around 6,204 or 6,023 are tested. A buy-the-dip approach makes sense if the index moves toward the 6,023 to 5,852 range, with a focus on sectors showing strong earnings momentum like Renewable Energy and Real Estate. Watch for Construction sector stocks and small caps.

Additionally, keep an eye on the Financials and Industrials sectors for signs of renewed leadership. Should these sectors regain strength, it could signal a broader market rally.

S&P 500 Index Daily Technical Chart, August 24, 2025

Risk management remains essential. Setting stop-loss orders just below 6,130 helps protect against sharp declines, while hedging with inverse ETFs or options can mitigate the impact if volatility spikes unexpectedly.

In summary, expect a volatile week shaped by technical signals and seasonal trends. As I mentioned above, NVIDIA’s earnings report on August 27 will be a key moment for tech sector sentiment. Watch the support levels at 6,204 and 6,023, alongside resistance points at 6,353 and 6,427. The best approach is to remain cautious, consider buying on dips near critical support, and focus investments on earnings-driven large and small caps that can weather the turbulence ahead.

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