THE WEEK AHEAD: August 18-22, 2025

Good morning, investors!

Markets hit fresh records last week with the S&P 500 and Nasdaq up 0.9% and 0.8% respectively, shrugging off mixed inflation data as investors focused on the Fed's shifting policy stance. This week brings the ultimate Fed event—Jerome Powell's Jackson Hole speech on Friday—alongside a retail earnings bonanza that will test the American consumer's resilience. Here's what you need to know:

POWELL'S JACKSON HOLE MOMENT

Friday's speech by Fed Chair Jerome Powell at the Kansas City Fed's Economic Policy Symposium represents the week's most significant event. The theme "Labor Markets in Transition: Demographics, Productivity, and Macroeconomic Policy" couldn't be more timely, given recent employment weakness.

Powell faces intense pressure from multiple fronts. Treasury Secretary Scott Bessent suggested this past week that the Fed should cut rates by half a percentage point in September, while traders have priced in greater than 80% odds of at least a quarter-point cut. Whether Powell signals rate cuts at all—and their potential magnitude—could be revealed in his Jackson Hole remarks.

The speech comes after an unusual development: the first double dissent by Fed board members in over 30 years at July's meeting, highlighting internal divisions that Powell must navigate publicly.

RETAIL EARNINGS EXTRAVAGANZA

With many retailers operating on fiscal years ending in January, they largely have the earnings stage to themselves this week. The lineup reads like a who's who of American retail:

• Tuesday: Home Depot (HD), Medtronic (MDT)
• Wednesday: Target (TGT), Lowe's (LOW), TJX Companies (TJX), Estée Lauder (EL)
• Thursday: Walmart (WMT), Ross Stores (ROST), Intuit (INTU), Workday (WDAY)

This concentrated retail reporting will provide crucial insights into consumer spending patterns, inventory management, and any tariff impacts on pricing strategies. Walmart's Thursday report will be the crown jewel, offering the broadest view of American consumer health given the company's massive scale and diverse customer base.

HOME IMPROVEMENT SECTOR FOCUS

Tuesday and Wednesday feature the two home improvement giants: Home Depot and Lowe's. These reports will reveal whether the housing market doldrums are translating into reduced spending on home projects, or if consumers are channeling money away from home purchases into renovations.

Both companies face questions about pricing power, supplier cost pressures, and seasonal demand patterns amid ongoing affordability challenges in residential real estate.

HOUSING MARKET PULSE

The struggling housing sector gets additional attention with key data releases:

• Tuesday: Housing Starts for July (forecast: 1.3 million annualized rate, slightly down from June)
• Thursday: Existing-Home Sales for July (expected: 3.9 million rate, roughly flat from June's near-crisis lows)

Existing-home sales remain near their lowest levels since the 2008-09 financial crisis, making any signs of stabilization significant for both housing-related stocks and broader economic sentiment.

TECHNOLOGY EARNINGS HIGHLIGHTS

Several tech companies report, led by:

• Monday: Palo Alto Networks (PANW) - faces scrutiny over its $25 billion CyberArk acquisition
• Wednesday: Baidu (BIDU) - Chinese search giant with expected 37% profit decline
• Thursday: Zoom (ZM) - testing post-pandemic relevance

Palo Alto's report will be closely watched, given recent analyst downgrades questioning the strategic value of its massive CyberArk acquisition and concerns about pricing pressure in cybersecurity markets.

FED MINUTES AND ECONOMIC DATA

Wednesday brings the FOMC minutes from the July meeting, featuring the historic double dissent, which may reveal the internal dynamics behind the unusual split decision.

Thursday's economic data includes:

• S&P Global Manufacturing PMI (expected: 49.9, still below expansion threshold)
• S&P Global Services PMI (forecast: 53.4, down from July's 55.7)

The manufacturing PMI remaining below 50 would mark continued contraction, adding to labor market concerns that could support Fed dovishness.

WHAT I'M WATCHING

Powell's Jackson Hole speech will be parsed for any signals about September rate cuts. Given the Treasury Secretary's public call for 50 basis points and market pricing for cuts, Powell's challenge is managing expectations while maintaining Fed independence. Any hint of a more aggressive easing cycle could trigger significant market moves.

Walmart's Thursday earnings represent the ultimate consumer litmus test. As the nation's largest retailer with exposure across income demographics, Walmart's guidance and commentary about spending patterns, inventory levels, and pricing strategies will influence not just retail stocks but broader economic narratives.

The Target-Walmart comparison will be particularly interesting. Both serve broad customer bases, but with different market positioning—Target's more discretionary focus versus Walmart's necessity-driven model could reveal important consumer behavior shifts.

Home Depot and Lowe's results will test whether housing market weakness is spilling over into related spending categories. Any signs of project deferrals or trading down in home improvement could signal broader consumer caution.

I'm also watching for corporate commentary about tariff impacts across these retail earnings. While markets have adapted to trade policy uncertainty, the cumulative effects on pricing, sourcing, and margins continue to evolve.

The FOMC minutes could reveal the reasoning behind the historic double dissent, potentially providing insights into how deep the divisions run within the Fed and what it might mean for future policy decisions.

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P.S. With retail earnings dominating and Powell speaking Friday, do you think consumer strength or Fed policy will be the bigger market driver this week? Hit reply with your thoughts on which retail report will be most telling!