Market Recap - Tuesday, August 19, 2025
Tech Pullback Weighs on Markets Despite Strong Breadth
Stocks slid today as big tech dragged down the broader market, with the S&P 500 falling 0.58%, the Nasdaq tumbling 1.46%, and the Russell 2000 down 0.78%. The Dow finished flat (+0.02%), masking underlying rotation happening beneath the surface. Despite red on the screen, market breadth was actually positive, with more stocks rising than falling, as cyclical and value names held up better than growth.
Tech giants like Nvidia and Meta led the decline, while AI-related names like Palantir were also hit. But areas like home improvement, homebuilders, autos, logistics, and select retailers outperformed. Treasury yields dipped 2–4 bps, offering some relief to rate-sensitive sectors. Oil fell 1.7%, while Bitcoin dropped 2.7% and gold slipped 0.6%.
What Moved the Market Today
Tech Under Pressure: Today’s sell-off was driven by a rotation away from big tech, growth, and AI names. There wasn’t one clear catalyst, but traders pointed to profit-taking, crowded positioning, and growing investor hedging activity around the “Magnificent 7.” News that Meta may restructure its AI division and Nvidia’s China chip updates added to uncertainty.
Value and Cyclical Stocks Lead: While tech stumbled, value and cyclical sectors like housing, chemicals, and transportation outperformed. Home Depot, despite an earnings miss, rose on signs of improving sales trends and a reaffirmed full-year outlook. Its CFO also eased worries on tariffs, saying broad price hikes weren’t needed.
Fed Watch Continues: Market remains in wait-and-see mode ahead of Powell’s Jackson Hole speech Friday. September rate cut odds have slipped slightly to ~83%, and markets are pricing in just over 50 bps of easing for the full year. Fed officials Waller and Bostic will speak Wednesday ahead of the FOMC minutes, though Powell remains the main event.
Housing Starts Surprise to the Upside: July housing starts rose 5.2%, hitting their highest level since February and beating expectations. However, building permits fell for the 7th time in 8 months, suggesting continued pressure ahead. Builders report slower-than-expected demand, especially in higher-end markets, despite lower mortgage rates.
Corporate News Highlights:
Intel (+7%): Jumped after SoftBank invested $2B, boosting sentiment for chipmakers.
Tegna (+4.3%): To be acquired by Nexstar for $6.2B.
Best Buy (+3.2%): Rose after launching a new digital marketplace.
Palo Alto Networks (+3.1%): Beat earnings and raised guidance, with analysts highlighting strong free cash flow and platform momentum.
Viking Therapeutics (-42%): Plunged after mixed results in a key obesity drug trial.
Fabrinet (-12.8%): Dropped despite decent earnings, as Datacom weakness and guidance sparked concerns.
Medtronic (-3.1%): Slipped after Elliott took a stake and announced board changes; results were solid, but forward outlook drew scrutiny.
Here’s Our Take:
Despite today’s red close, this wasn’t a panic-driven sell-off. What we saw was a healthy rotation out of overbought tech and AI names into more reasonably valued, rate-sensitive sectors. This kind of rotation often signals portfolio rebalancing, not fear. The broader market’s resilience, shown in the outperformance of equal-weighted indices, suggests underlying strength.
As we approach the Jackson Hole speech from Fed Chair Powell, markets may stay choppy. The focus now is on whether Powell tilts dovish enough to keep September cut hopes alive. Meanwhile, housing data and earnings from retailers like Target and Walmart will give us key signals on consumer sentiment and the impact of tariffs.
The bottom line: Volatility may pick up, but beneath the surface, the market is still finding support in pockets that benefit from lower rates and steady demand.
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