August 26, 2025

Wall Street stocks cooled off on Monday after a lively Friday that sent the Dow Jones Industrial Average to a record high! Why the sudden pause? Investors are carefully reading the tea leaves on U.S. interest rates and gearing up for one of the most awaited events this week — Nvidia's quarterly earnings. On Friday, stocks soared when U.S. Federal Reserve Chair Jerome Powell hinted at the Jackson Hole Symposium that a rate cut might be on the table at the central bank’s September meeting. Powell based this on signs of labor market weakness recently. Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma, summed it up perfectly: "The market has a Jackson Hole hangover," he said. "Investors are taking a little bit of a breather." Things to watch this week include the Personal Consumption Expenditures Price Index, the Fed’s favorite inflation gauge, due out on Friday. Next week’s official nonfarm payrolls report will also be a big deal. Fed Chair Powell, however, warned, "a rate cut was not certain." Brian Klimke, investment director at Cetera Investment Management, highlighted the Fed’s dilemma: "We have the job market that's rolling over a little bit and the economy is weakening, so the Fed needs to act sooner than later and they're seeing it too." Shining brightly ahead is Nvidia, which edged up 1% on Monday in anticipation of its quarterly report on Wednesday. As one of the world’s most valuable companies, and making up about 8% of the S&P 500, Nvidia’s results will test the red-hot AI craze. Michael Green, portfolio manager at Simplify Asset Management, called Nvidia’s report "an incredibly important event from a market participant standpoint." After Powell’s hints, big brokers like Barclays, BNP Paribas, and Deutsche Bank updated their forecasts, now expecting a 25-basis-point rate cut next month. The CME Group’s FedWatch tool shows traders now give an 84% chance of a Fed rate cut in September. Policymakers John Williams and Lorie Logan’s statements later Monday were also in the spotlight to see if they agreed with Powell’s thoughts. The market indices reflected caution. The S&P 500 closed down 0.43% at 6,439.32, the Nasdaq dipped 0.22% to 21,449.29, and the Dow Jones fell 0.77% to 45,282.47. Nine out of eleven S&P 500 sectors slid, with consumer staples dropping 1.62% and health care falling 1.44%. Friday’s upbeat mood is still fresh, as the Dow had just posted its first record close since December 2024, and the S&P 500 enjoyed its best one-day rise since May. On individual stocks, Jefferies raised its year-end target for the S&P 500, riding the optimistic wave. But not all news was sweet — Keurig Dr Pepper plunged 11.5% after announcing it would buy JDE Peet's for $18.4 billion in cash. Furniture sellers RH and Wayfair each fell over 5% after U.S. President Donald Trump said his administration would investigate furniture import tariffs. Intel dipped 1% after Trump revealed the U.S. government was taking a stake in the chipmaker and promised more deals like this. Trading volume was lighter than usual, with 14.2 billion shares changing hands versus a 20-day average of 17.1 billion. Declining stocks outpaced advancing ones in the S&P 500 by a 4-to-1 ratio. Notably, the S&P 500 posted 17 new highs and no new lows, while the Nasdaq recorded 125 new highs against 39 new lows. So, hold tight! Between Nvidia’s AI magic and the Fed’s rate moves, this week will be a thrilling rollercoaster for markets and investors alike!

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Tags: Wall street, Federal reserve, Nvidia earnings, Interest rates, Stock market, Jackson hole,