August Heatwave: Stocks Rally, Oil Slumps, and Policy Sparks

Daniel Ledenev
Aug 17
6 min read

Updated: Sep 6

👋 Welcome Back Investors! (August 11 to 15, 2025)

Mid August was anything but sleepy on Wall Street. Softer U.S. inflation numbers gave stocks room to rally, pushing the S&P and Nasdaq to new highs while the Dow brushed up against records of its own. Treasury Secretary Bessent stirred the pot with calls for a hefty Fed rate cut, and Japan hinted at shifting away from ultra-loose policy. Meanwhile, the U.S. and China tariff truce lifted global sentiment, and big corporate moves from Ford’s EV investment to Ørsted’s shock capital raise, kept traders on their toes. It was one of those weeks where the market proved that summer calm can come with plenty of plot twists.

📊 Dow Jones Rallies as Inflation Surprise Fuels Optimism

The Dow Jones surged this week after U.S. inflation data delivered a welcome surprise for investors, easing fears of renewed price pressures and stoking hopes of Federal Reserve rate cuts ahead. Headline inflation held steady at 2.7% for July, slightly cooler than forecasts, while core inflation inched only modestly higher. The softer data was enough to ignite a broad market rally, pushing the Dow close to record highs and sending the S&P 500 and Nasdaq to fresh peaks. Analysts pointed out that the figures gave the Fed more breathing room, with expectations rising that policymakers could deliver a half-point cut as early as September. Treasury Secretary Scott Bessent reinforced that view midweek, calling for aggressive action to support growth. Industrials and financials led the Dow higher, while technology shares extended their momentum on the prospect of lower borrowing costs. Bond yields eased and the dollar slipped as traders recalibrated their rate outlooks, highlighting just how sensitive markets remain to every inflation reading. Shares across Wall Street ended the week on firm footing, underscoring a renewed sense of optimism that the path toward lower rates is finally opening up.

💬 Treasury Secretary Bessent Urges Fed to Weigh 50 bps Cut

U.S. Treasury Secretary Scott Bessent turned up the heat on the Federal Reserve this week, urging policymakers to consider a bold 50-basis-point rate cut at their upcoming September meeting. Speaking at an economic forum, Bessent argued that easing monetary policy more aggressively would provide critical support for households and businesses still adjusting to slower growth and lingering inflation pressures. He also suggested that a strong move now could reduce the risk of a deeper slowdown later, framing the cut as both a defensive and proactive step. The call immediately caught Wall Street’s attention, fueling speculation that political influence is adding pressure on the Fed just as inflation data shows signs of cooling. Markets responded with enthusiasm, equities pushed higher, bond yields dipped, and rate-sensitive sectors rallied on the prospect of cheaper borrowing costs. Still, Fed officials have been cautious, with some signaling that while cuts are on the table, a half-point move might be too aggressive given the resilience of the labor market. Analysts noted the split underscores a growing tension between the administration’s push for stimulus and the central bank’s measured approach.

🌏 TSX Futures Climb on U.S. and China Trade Truce Extension

Canadian markets got a lift this week as TSX futures rose on news that the U.S. and China agreed to extend their 90-day tariff truce, easing investor concerns over a fresh round of trade tensions. The extension provided a welcome boost to global risk sentiment, with energy, mining, and industrial shares leading gains in Toronto. Higher commodity prices; particularly in oil, copper, and gold, also supported the TSX, given the index’s heavy resource exposure. Analysts say the truce offers Canadian exporters some breathing room, especially in sectors sensitive to global demand like energy and base metals. Still, the relief comes against a complicated backdrop: Canada is simultaneously navigating its own trade frictions with China, including ongoing disputes over canola and rare earth imports. At the same time, domestic investors are watching closely for upcoming Bank of Canada policy signals and fresh economic data on manufacturing and wholesale activity. The truce may have calmed markets in the short term, but with geopolitical risks lingering, the TSX’s path forward is likely to remain closely tied to the ebb and flow of international negotiations.

🛢️ Oil Set for Sharp Weekly Drop on Tariff Worries and Russia Deadline

Oil prices stumbled last week, heading for one of their steepest weekly declines in months as geopolitical uncertainty and trade tensions weighed heavily on sentiment. Fresh U.S. tariff measures reignited fears of weaker global demand, while the looming deadline for a U.S. and Russia ceasefire deal added another layer of volatility. Traders grew cautious, with Brent crude sliding more than 4% on the week and WTI tumbling over 5%, erasing gains from earlier in the month. Market analysts pointed to a double bind for oil: slowing demand expectations on one side and potential supply disruptions on the other. The tariffs dampened the outlook for global growth, undercutting consumption forecasts, while uncertainty around Russia’s role in global energy flows kept risk premiums elevated. For Canada’s resource-heavy markets, the drop added pressure to energy producers even as broader equities found support from softer inflation data. Heading into mid-August, investors remain wary, with oil’s path now hinging on whether trade frictions cool and whether progress is made in high-stakes peace talks.

🔋 Vulcan Elements Secures $65M to Boost Rare Earth Magnet Production

Vulcan Elements made headlines this week by announcing a $65 million Series A funding round to scale up its production of high-performance rare-earth magnets in the United States. The funding will support the expansion of domestic supply chains for critical materials that are essential in electric vehicles, wind turbines, drones, and defense technologies, sectors currently dominated by Asian producers, particularly China. The company highlighted that its proprietary process allows for more efficient and sustainable production, reducing reliance on foreign imports while meeting growing demand for advanced energy and aerospace applications. Investors in the round include a mix of venture capital and strategic partners focused on strengthening U.S. industrial capacity. Industry analysts say the move is timely: demand for rare-earth magnets is expected to surge as global electrification accelerates, and Washington has prioritized securing local supply chains to mitigate geopolitical risk. By scaling operations domestically, Vulcan aims to position itself as a key player in the race to secure critical materials, offering not only economic benefits but also national security advantages. For markets, the announcement underscores the growing alignment of private capital and government strategy in reshaping the future of clean energy and advanced manufacturing.

👀 Stocks to Watch: What This Week’s Moves Reveal

Markets carried their momentum into mid-August as cooler inflation data and Fed speculation powered equities higher, even as commodities stayed choppy. The Dow flirted with record levels, the S&P 500 and Nasdaq logged fresh highs, and rate-sensitive names rallied on hopes of easier policy. Still, corporate shakeups and global trade headlines kept volatility alive. Here are the standout movers of the week:

Apple (AAPL) – Gained more than 5% after announcing a $100B U.S. investment to expand domestic manufacturing. The move, seen as a hedge against chip tariffs, kept Apple in the spotlight as a market leader.
Ørsted (ORSTED.CO) – Tanked nearly 30% after scrapping plans to sell a U.S. offshore wind stake and unveiling a $9.4B rights issue, sparking fresh doubts about its capital strength.
Ford (F) – Rose over 4% following its $2B pledge to overhaul a Kentucky plant for a new EV pickup line, boosting optimism for its long-term electric strategy.
Rumble (RUM) – Jumped more than 12% on strong Q2 earnings and its surprise $1.17B bid for AI cloud firm Northern Data, positioning itself as a bigger tech player.
Vulcan Elements (Private) – Drew attention across the clean tech space after raising $65M in Series A funding to expand U.S. rare-earth magnet production, highlighting investor demand for critical materials.
BMO (BMO.TO) – Edged higher after reports the bank may sell its $1B transportation finance arm, a move that could streamline operations and free up capital.

🛎️That’s a Wrap!

Another week in the books, and this one had no shortage of action. Softer U.S. inflation numbers sent the S&P and Nasdaq to fresh highs, while the Dow flirted with record territory. Apple grabbed headlines with a massive $100B U.S. investment pledge, Ford rolled out a $2B EV push, and Rumble surprised with a bold $1.17B acquisition bid. On the flip side, Ørsted tumbled on a $9.4B rights issue, showing how quickly sentiment can turn. Canada’s TSX caught a lift from the extended U.S. and China tariff truce, even as oil prices logged another rough stretch. With Fed policy debates heating up and global headlines still rolling, next week looks just as packed. Summer trading may be sunny, but it’s definitely not slow.

Until then, stay focused and stay curious. Catch you next week 👋