S&P 500 Weekly Market Insights - Week of August 31st

# Weekly Market Analysis: S&P 500 Outlook for the Week of August 31, 2025

Welcome back to the Hobbs Trades weekly newsletter! As your go-to market analyst here at [www.hobbstrades.com](http://www.hobbstrades.com), I'm diving into the S&P 500 index as we head into the short trading week starting September 1, 2025. With Labor Day closing markets on Monday, expect a compressed four-day session packed with key economic data that could sway broad market sentiment. The S&P 500 closed the prior week on a modest dip from recent highs, but overall resilience year-to-date suggests potential for consolidation or rebound amid rate cut expectations and solid earnings growth. Let's break it down.

## Recent Performance Recap

The S&P 500 index wrapped up August on a subdued note, closing at 6,460.26 on August 29, 2025, down 41.60 points or -0.64% from the previous day. This represented a weekly pullback amid broader consolidation, but the index has shown strong performance year-to-date, up approximately 35% from its 52-week low, driven by tech and growth sectors. August delivered mixed returns, with the index hitting a 52-week high of 6,508.23 on August 28 before retreating.

Looking at monthly trends, the S&P 500 has posted consistent gains, with July and earlier months contributing to the YTD surge, though volatility from AI rotations and policy uncertainties added chop. Valuations remain elevated, with a forward P/E ratio around 22.4-23.3, above historical averages, reflecting growth premiums but raising concerns over sustainability if earnings falter. Recent X discussions highlight cautious optimism, with talks of potential S&P inclusions driving inflows and comparisons to commodities signaling relative overvaluation in equities.

## Key Price Levels for S&P Futures (ES)

ES futures, tracking the S&P 500, are in a consolidative range post-recent highs, with current levels aligning near 6,460. Watch these technical levels for potential moves:

- **Support Levels**:

- Immediate: 6,444 (recent day low from August 29).

- Next: 6,399–6,370 (confluence of swing lows and key support zones).

- Deeper: 6,314 (potential retracement if labor data disappoints).

- **Resistance Levels**:

- Immediate: 6,491–6,508 (prior highs from late August).

- Next: 6,531 (short-term target).

- Major: 6,580–6,648 (higher resistance and RSI overbought zones).

A breakout above 6,508 could signal stronger upside, especially on positive economic surprises, while a drop below 6,444 might test deeper supports amid risk-off flows.

## SPY ETF Options Chain Insights

The SPDR S&P 500 ETF (SPY), a primary vehicle for S&P exposure, shows active but cautious options flow heading into the week. Focusing on the nearest weekly expiration (September 2, 2025—post-Labor Day, with limited time decay impact):

- **High Open Interest Calls** (Bullish Focus):

- Strike 640: 1,262 OI, volume 3,564, last price $5.54, IV 8.31%.

- Strike 642: 1,360 OI, volume 5,319, last price $3.80, IV 7.42%.

- Strike 644: 2,254 OI, volume 75,885, last price $2.32, IV 6.59%.

- Strike 645: 2,515 OI, volume 136,040, last price $1.68, IV 6.18%.

- Strike 646: 2,591 OI, volume 89,954, last price $1.14, IV 5.86%.

- Strike 647: 2,341 OI, volume 69,172, last price $0.72, IV 5.55%.

- Strike 648: 2,875 OI, volume 43,619, last price $0.42, IV 5.32%.

- Strike 650: 6,207 OI, volume 39,539, last price $0.11, IV 5.13%.

- **High Open Interest Puts** (Defensive Focus):

- Strike 530: 1,502 OI, volume 10, last price $0.01, IV 57.81%.

- Strike 540: 1,325 OI, volume 7, last price $0.01, IV 51.56%.

- Strike 550: 5,367 OI, volume 195, last price $0.01, IV 50.00%.

- Strike 560: 1,150 OI, volume 100, last price $0.02, IV 44.53%.

- Strike 580: 1,971 OI, volume 2,598, last price $0.03, IV 36.72%.

Implied volatility (IV) remains low, around 5-8% for at-the-money strikes near 645, indicating subdued expected moves short-term. Notable volume spikes at 644-646 calls suggest upside bets, while put activity at lower strikes points to hedging. SPY closed at 645.05 on August 29. No extreme skew, but higher call volume could hint at bullish positioning if data beats. Watch for rollovers post-weekly expiry.

## Economic Events to Watch This Week

This week's calendar is labor-heavy, which could amplify S&P volatility given its broad economic sensitivity. Markets closed Monday for Labor Day—ironic timing! Key highlights:

- **Tuesday, September 2**: S&P PMI Final (9:45 ET), ISM Manufacturing (10:00 ET). Expect focus on manufacturing rebound signals.

- **Wednesday, September 3**: Job Openings (July, 10:00 ET), Factory Orders.

- **Thursday, September 4**: ADP Employment, Jobless Claims, ISM Services.

- **Friday, September 5**: Nonfarm Payrolls (August), Unemployment Rate. This is the big one—consensus expects softening, but a surprise could swing sentiment.

Global cues from China and Europe may also filter in, but U.S. data will dominate.

## Outlook for the Week

Short-term uncertainty persists with elevated valuations and potential pullbacks, but the S&P 500's leadership positions it for potential 10-11% gains into year-end, with targets ranging from 6,500 to 7,100 if EPS growth holds at 7% and Fed cuts support. Bullish if holding above 6,444 and breaking 6,508; bearish below on weak jobs data. Options suggest traders are positioned for mild moves, so volatility could spike on surprises.

*Data as of August 30, 2025. Not financial advice—always do your own research.*