U.S. stocks slipped this week, closing out August on a mixed note as investors balanced encouraging inflation data, strong corporate earnings, and fresh trade developments against concerns of political and technological volatility.
The S&P 500 finished the week down 0.1%, while the Dow Jones Industrial Average and Nasdaq Composite each shed about 0.2%. The Russell 2000, a measure of smaller companies, bucked the trend with a 0.2% gain. Despite the modest pullback, the S&P still posted its fourth straight monthly advance, climbing 1.9% in August.
The market’s direction was shaped largely by new inflation figures. The July Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred gauge of price pressures, came in line with expectations, reinforcing speculation that the central bank could cut interest rates as soon as September. That prospect kept longer-term optimism intact even as traders locked in some profits after a strong summer rally.
“Investors are leaning into the idea that the Fed’s next move is a cut, not a hike,” said Lindsey Bell, chief strategist at 248 Research. “But with the jobs report around the corner, no one wants to get too far ahead of themselves.”
Earnings season also added fuel. Retailers Dollar General and Williams-Sonoma posted stronger-than-expected results, underscoring consumer resilience, while chipmaker Nvidia delivered blockbuster numbers and announced a record $60 billion stock buyback. Even so, Nvidia shares traded sideways, a sign that investors may already have priced in high expectations for artificial intelligence growth.
AI optimism met resistance later in the week after Alibaba unveiled its own AI chip, sparking sharp declines in Nvidia, AMD, and other semiconductor names as traders reassessed U.S. dominance in the space.
Meanwhile, a U.S. appeals court ruling that struck down Trump-era tariffs injected new uncertainty into global trade. Importers may now seek refunds, a move that could ripple through both industrial and consumer sectors in coming months.
The combination of Fed speculation, earnings surprises, and trade headlines left Wall Street jittery heading into the long Labor Day weekend. Bond markets signaled caution as well, with yields holding steady amid heightened chatter about political interference at the Fed after reports that President Trump sought to remove Governor Lisa Cook.
Looking ahead, traders are bracing for a heavy week of economic data, including the August jobs report, ISM manufacturing surveys, and JOLTs job openings. Each release will help clarify whether the Fed follows through on a rate cut in September.
For now, the market’s summer run remains intact—but September, often the market’s most volatile month, could test that resilience.
By: BSH staff