Market Recap – Friday, August 29, 2025
Stocks Slip as Tariff Worries and AI Fatigue Drag Tech Lower
Stocks closed lower today, giving back some of the week’s gains in a quiet, end-of-summer session. The S&P 500 slipped 0.64%, while the Nasdaq fell 1.15% and the Dow lost 0.20%. The Russell 2000 dipped 0.50%. Big tech underperformed with Nvidia and Tesla dragging on sentiment, and semiconductors broadly lower following disappointing earnings from Marvell and Dell. Meanwhile, energy, food/beverage, biotech, and large-cap bankshelped cushion the downside.
Earnings were a headwind, especially in tech and retail. Several high-profile names including Dell, Marvell, and Gapposted results that either missed the mark or raised red flags about tariffs and margins. Tariff concerns reemerged with reports that companies like Caterpillar and Gap are facing larger cost impacts than expected — and are passing those increases onto consumers. Meanwhile, Fed Governor Waller doubled down on his dovish stance, saying he favors a 25 bp rate cut in September and more over the next 3–6 months. His remarks helped reinforce market expectations for near-term easing, though stocks were unmoved.
The latest read on inflation showed core PCE rising 2.9% y/y, right in line with expectations and the highest since February. Personal income and spending data were also in line, suggesting steady consumer activity. The August consumer sentiment survey came in slightly below expectations, with inflation expectations creeping higher and outlooks on personal finances worsening. The trade deficit widened sharply to over $103B in July, and the Chicago PMI showed ongoing weakness in manufacturing.
Here's Our Take
After a four-month rally, the market is showing some signs of fatigue, particularly in tech. Nvidia’s beat and raise wasn’t enough to keep the AI rally going, and weaker results from other AI-adjacent names added to the drag. The re-emergence of tariff concerns — particularly their impact on corporate margins and consumer prices—adds a new wrinkle to the inflation and earnings narrative. That said, the consumer still looks resilient for now, and core inflation is moving in the right direction, giving the Fed cover to consider cuts.
Looking ahead, next week is packed with key macro events, including ISM surveys, job openings data, and the all-important August jobs report on Friday. With seasonality and macro crosswinds building, expect more volatility and potentially sharper sector rotations. Rate cut hopes, earnings revision trends, and political drama at the Fed will all remain key swing factors for sentiment.
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