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Tech weakness tempers gains, but stocks notch multi-month winning streaks as Fed rate cut hopes and strong earnings buoy markets
Wall Street closed out a turbulent August on a subdued note, with major indices dipping Friday as technology stocks weighed on broader gains. The Dow Jones Industrial Average slipped 92 points, or 0.2%, while the S&P 500 declined 0.64%. The tech-heavy Nasdaq Composite fell 1.15%, led lower by disappointing earnings from Dell and Marvell Technology, as well as a pullback in Nvidia, the centerpiece of the artificial intelligence trade.
Despite the end-of-month retreat, U.S. stocks posted healthy August gains: the Dow climbed 3.2%, the S&P 500 rose 1.91%, and the Nasdaq advanced 1.58%. The Dow and S&P 500 notched their fourth consecutive month of gains—their strongest streak in a year—while the Nasdaq recorded five straight monthly advances, its best run since early 2024.
Tech Momentum Cools
Technology shares, which fueled much of 2024’s rally, showed signs of fatigue. Nvidia logged its first monthly decline since March, falling 3.36% on Friday. Dell shares sank 8.9% and Marvell plunged 18.6% after earnings failed to meet lofty investor expectations.
“Expectations for tech are sky high,” said Jay Hatfield, CEO of Infrastructure Capital Advisors. “The companies have done well, but not necessarily well enough to get them to move to the next level.” Analysts at Citi echoed this sentiment, noting that while earnings were strong, AI-related growth outlooks “showed deceleration,” contributing to a loss of momentum.
Inflation and Fed Policy in Focus
Markets also absorbed fresh inflation data. The Personal Consumption Expenditures (PCE) index rose 2.6% year-over-year in July, while the Fed’s preferred core PCE measure increased 2.9%—the fastest pace since February but still aligned with expectations.
“Inflation is increasing ever so slightly, but right in line with forecasts,” said Chris Zaccarelli, CIO at Northlight Asset Management. Investors are now betting heavily on potential Federal Reserve interest rate cuts as early as September.
Fed Chair Jerome Powell signaled caution at the recent Jackson Hole symposium, citing labor market concerns, but hinted at policy easing ahead. The Russell 2000, a small-cap index sensitive to rates, surged 7% in August, its best month since November.
Market Calm Amid Political Tensions
The S&P 500 closed above 6,500 points for the first time ever on Thursday, marking its 20th record high of 2025. Historically, when the index hits 20 or more record highs by August, it ends the year higher 90% of the time, with an average gain of 5.5%, according to CFRA Research.
Yet, political uncertainty remains a backdrop. The Trump administration’s tariff policies and its push to remove Fed Governor Lisa Cook have raised concerns. Analysts suggest the muted market reaction reflects expectations of prolonged legal battles, but larger financial market movements could follow.
Gold Shines, September Looms
Gold prices climbed 1.2% Friday, up 5% for the month—the metal’s best performance since April—driven by expectations of Fed rate cuts and its role as a hedge against inflation.
Looking ahead, September poses risks. Historically the weakest month for stocks, the S&P 500 has averaged a 0.7% decline in September over the past 75 years. “We’re probably overdue for a pullback now,” said Scott Wren, senior global strategist at Wells Fargo Investment Institute. “If we do get one, we’ll be looking to lean more into stocks.”
Traders will closely watch upcoming U.S. jobs data on September 5 and Consumer Price Index inflation figures on September 11. With policy uncertainty, economic data, and tech momentum all in play, Wall Street’s wild ride appears far from over.
