Stocks Face Major Market Moving Events. How to Navigate Trump, Ukraine, Fed, Earnings.
Aug 18, 2025 06:40:00 -0400 | #Markets #The Barron's Daily
U.S. President Donald Trump (R) and Ukrainian President Volodymyr Zelensky meet at the White House on Feb. 28, 2025. (Andrew Harnik/Getty Images)
“No news is good news,” an old proverb goes. But a flurry of geopolitical summits and corporate updates this week ought to help the market to keep chugging higher, barring any unexpected outcomes.
Ukraine is still the front-page story. Although President Donald Trump’s Alaska summit with Russia’s Vladimir Putin Friday didn’t result in a cease-fire, investors are hopeful Washington and Moscow are close to carving out a peace deal. Ukraine’s Zelensky and European leaders will have their say in today’s meeting with Trump.
The talks haven’t moved stocks much yet, but that could change. Ending the war would lift a major source of geopolitical uncertainty and probably drag down oil prices, removing one inflationary pressure.
Big-box retailers’ second-quarter earnings could also determine the direction of the market, given they’re likely to show how consumer spending is holding up amid worries about sweeping tariffs. Home Depot and Walmart among those set to report.
Wall Street has concerns about guidance because of the fragile U.S. jobs market, but all signs point to solid-enough results. Retail sales data were robust through the early summer months, and the likes of Amazon.com and Ralph Lauren have said they are yet to see a pullback in spending.
Last but not least, investors will be watching what happens at Jackson Hole, with the Federal Reserve’s annual Economic Symposium set to kick off Thursday.
Fed Chair Jerome Powell’s speech will be the event’s defining moment. Powell is widely expected to signal that interest-rate cuts are coming. That would be a welcome development for the market, given the central bank hasn’t lowered borrowing costs at all in 2025, although there’s a chance investors have got so giddy about rate cuts they’ve set themselves up for disappointment.
The major indexes are just off record highs, so it’s not like stocks have been starved of catalysts—but any of Ukraine, retail earnings, and Jackson Hole could trigger further market gains.
*** Join Barron’s senior economics writer Megan Leonhardt today at noon when she talks with David Wessel, director of the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution, about what investors can expect from this week’s annual Fed gathering at Jackson Hole. Sign up here.
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Powell’s Speech at Jackson Hole Has Huge Stakes for Fed
Federal Reserve Chair Jerome Powell speaks Friday at the central bank’s annual Jackson Hole Economic Symposium, and it may be the defining speech of his career. With his term ending next May and criticism by the Trump administration, it may be his best chance to argue for central bank independence.
- This year’s conference, titled “Labor Markets in Transition,” will focus on how demographics, productivity, and immigration are reshaping the U.S. job market and the broader economy. Powell’s term has been spent navigating structural changes in the economy while trying to fulfill the Fed’s dual mandate.
- President Donald Trump’s attacks on Powell not cutting interest rates has precedent. Pressure by the 1970s Nixon administration helped push then—Fed Chair Arthur Burns to keep interest rates low despite rising inflation. Later, Paul Volcker, was forced to raise rates to nearly 20% to break inflation.
- Powell has spent the past few postpandemic years battling inflation. After incorrectly believing pandemic-era inflation would be transitory, Fed officials hiked the benchmark rate 11 times, starting in March 2022, to more than 5%. The effort was largely successful, but the path forward looks more challenging, and less certain.
- Wage growth has slowed from a 6% annual rate in 2022 to about 3.9%. Employers added just 73,000 jobs in July, and payroll totals for May and June were revised lower by more than a quarter-million. Inflation ticked higher this summer, and tariffs are pressuring import prices.
What’s Next: This will be Powell’s 13th year attending Jackson Hole, and it may be his last. Although his term as chair runs until May 2026, he has until January 2028 to depart the board. Few expect him to stay on as a Fed governor until that term ends. Read here for more.
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Ukraine’s Zelensky and an Entourage of European Leaders Visit White House
Ukraine President Volodymyr Zelensky is bringing an entourage of European leaders to the White House today after President Donald Trump’s meeting with Russian President Vladimir Putin on Friday. They are expected to push back on attempts to get them to agree to concessions in peace talks with Russia.
- The delegation includes European Commission President Ursula von der Leyen and the leaders of Germany, France, Italy, the U.K., NATO and others. The group said this weekend they were ready to work with Trump and Zelensky toward a trilateral summit with Putin.
- Before Friday’s meeting in Alaska, Trump had threatened serious consequences if a cease-fire in Russia’s war in Ukraine wasn’t reached. After the meeting, he backed off that, and said the best way forward was a peace deal, including territory concessions by Ukraine.
- Secretary of State Marco Rubio wouldn’t discuss what concessions were asked of Russia, but he said both sides would need to make them. Trump pushed back at criticism of his Alaska summit, saying in a social media message written in all-capital letters but without details that big progress was made.
- Trump’s special envoy Steve Witkoff told CNN that the U.S. got Russia to agree that the U.S. could offer “Article 5-like protection” to Ukraine, which is a reference to the collective defense mandate shared by NATO members.
What’s Next: Former Vice President Mike Pence, a member of the first Trump administration, said sanctions on Russia for failing to stop its war in Ukraine should continue to be an option for the current administration. Putin shouldn’t be able to use delay to continue the fighting in Ukraine until the winter hits, he told CNN.
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For Retailers, It’s Less About Earnings and More About Guidance
Wall Street isn’t too worried about second-quarter results from big retailers, including Walmart’s earnings report on Thursday, expecting them to reflect resilient consumer spending. The real risk lies in what the companies forecast for the rest of the year, and whether tariffs and uncertainty could herald a pullback.
- Morgan Stanley analyst Alex Straton expects sales to beat expectations for the quarter but also sees “widespread” cuts to full-year earnings guidance. In addition to Walmart, this week features reports from Target and home improvement stores Lowe’s and Home Depot.
- LSEG’s poll of institutional investors projects that earnings for companies in its retail and restaurant index will grow at an average annual rate of 5.7% in the quarter. Companies such as Walmart and Costco are headed for the highest quarterly earnings growth rate out of all the retail subsectors.
- So far this year, retailers and suppliers have opted to absorb many tariff-related costs to avoid passing them on to consumers, but as more tariffs kick in, that’s unlikely to last. BofA analysts have said that Target might have to hike prices more than Walmart to cover higher tariff-related costs.
- June and July retail sales were strong, proving that shoppers felt upbeat enough to keep spending, but they spent more partly because prices were higher, and surveys have indicated they plan to pull back. UBS analyst Michael Lasser expects inflation to accelerate and weigh on the consumer.
What’s Next: Home improvement companies, such as Home Depot and Lowe’s, may continue to struggle, reflecting the weakness of the housing market. Specialty retailers and department stores may also find themselves in a tough spot as consumer discretionary spending takes a back seat to essentials.
— Sabrina Escobar and Janet H. Cho
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Musk Says Tesla Robo-Taxi Rides Are Almost Here
The wait to try Tesla’s robo-taxi service for most residents of Austin, Texas, is almost over, according to CEO Elon Musk. It’s significant because Alphabet’s Waymo self-driving taxi is a much larger self-driving taxi service now, but Tesla is betting its simpler, less costly, technology and manufacturing scale will make it the market leader.
- Musk tweeted recently that his company’s robo-taxis would be “open access next month.” So anyone wanting to try out the offering and compare it with Waymo should be able to do it in two to six weeks.
- Tesla launched its self-driving taxis in Austin eight weeks ago. It was a modest event with a handful of Tesla Model Ys ferrying Tesla-selected passengers around a limited section of the city with a safety monitor in the front passenger seat. Still, the car did the driving, and Tesla has slowly expanded the area of Austin served by its self-driving cars.
- Tesla’s robo-taxis essentially run using the company’s Full Self Driving, or FSD, software and optical cameras. Waymo, which completes more than 250,000 fully autonomous taxi rides each week, uses radar, laser-based radar, or lidar, and cameras, along with advanced software.
- Essentially, any Tesla manufactured recently running the most up-to-date FSD software can become a robo-taxi, and Tesla can make millions of cars a year.
What’s Next: Winning in self-driving cars is a big deal for both companies. Wall Street sees the opportunity for AI-trained ride-hailing services worth trillions of dollars. The company’s AI projects—including humanoid robots and self-driving technology—are why many analysts are bullish on Tesla stock. The projects account for up to 75% of the company’s total valuation.
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Wealthier Consumers Are Prioritizing Travel as Industry Optimism Grows
More consumers are in vacation mode this month, thanks to it being August and because uncertainty over tariffs is starting to clear up. Wealthier consumers are prioritizing travel, and as travel planning lead times grow, travel-related companies are benefiting because profit becomes more predictable.
- Booking Holdings and Expedia have both seen higher-income customers splashing out on five-star hotels and international travel, and hotel chains are seeing greater spending at luxury properties. Airlines are seeing strong demand for premium seating, Gordon Haskett analyst Robert Mollins said.
- Online travel agents said more cautious spending by Americans has been offset by European travelers. Hotel management teams, including those at Hilton, Marriott, and InterContinental Hotels, noted that U.S. consumers have faced challenges recently, but had optimistic outlooks over the longer term, Mollins wrote.
- With Labor Day just weeks away, domestic round trip flights are 6% less than last year, averaging $720, according to AAA booking data. Hotel rates are down 11%, and car rental rates are 3% lower. International hotel rates are 2% lower, but airfare is 8% higher than last year.
- But there are still disruptions. A labor dispute forced Air Canada to cancel hundreds of flights and suspend plans to resume flights. Unionized flight attendants won’t go back on the job despite a return-to-work order. The airline said it would try to resume flights today.
What’s Next: People worldwide are consistently dedicating more of their budgets to leisure experiences than they were before the pandemic. A recent Barron’s interview with Melius Research analyst Conor Cunningham about the travel industry pointed to the long-term growth potential for travel companies.
— Teresa Rivas and Janet H. Cho
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner