Highlights;
- Major US stock indices declined Friday, with the S&P 500 (-0.64%), Dow (-0.20%), and Nasdaq (-1.22%) all closing lower, weighed down by weakness in technology and semiconductor stocks.
- Semiconductor stocks were hit hard after Marvell Technology (-18%) and Dell Technologies (-8%) reported disappointing earnings, while consumer sentiment and economic data (e.g., Chicago PMI) also underperformed expectations.
- Economic data showed mixed signals: personal spending rose 0.5% (strongest in four months), but inflation (core PCE index +2.9% y/y) remains sticky, while inflation expectations were revised lower, and dovish Fed comments hinted at potential rate cuts.
- Earnings highlights included gains for Autodesk (+9%), Ambarella (+16%), and Affirm Holdings (+10%), but declines for Ulta Beauty (-7%), Caterpillar (-3%), and cryptocurrency-exposed stocks like Coinbase (-1%) and Galaxy Digital (-4%).
The S&P 500 Index ($SPX) (SPY) ended Friday with a -0.64% decline, while the Dow Jones Industrials Index ($DOWI) (DIA) dipped -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -1.22%. September E-mini S&P futures (ESU25) dropped -0.68%, and September E-mini Nasdaq futures (NQU25) declined -1.31%.
Friday’s market decline was driven by weakness in technology stocks. Marvell Technology plummeted over 18% after reporting lower-than-expected Q2 data center revenue, leading semiconductor stocks lower. Similarly, Dell Technologies fell over 8% after announcing tighter profit margins on AI servers, impacting computer hardware stocks.
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Stocks extended their losses following weaker-than-expected economic data. The August MNI Chicago PMI dropped more than anticipated, and the University of Michigan’s US consumer sentiment index was revised lower. Inflation remains a concern as the US July core PCE price index, the Fed’s preferred inflation gauge, rose to a five-month high of 2.9% year-over-year.
However, consumer demand showed resilience, with July personal spending rising 0.5% month-over-month, the highest in four months. The University of Michigan’s inflation expectations were also revised lower, and dovish comments from Fed Governor Waller and San Francisco Fed President Daly suggested support for rate cuts, which was positive for stocks.
Key Economic Data:
– US July personal spending rose +0.5% m/m, meeting expectations.
– US July personal income rose +0.4% m/m, in line with expectations.
– The US July core PCE price index increased to 2.9% y/y, exceeding the Fed’s 2% target.
– The August MNI Chicago PMI fell to 41.5, below expectations of 46.0.
– The University of Michigan’s August consumer sentiment index was revised down to 58.2.
– Inflation expectations for 1-year and 5-10 years were both revised lower.
Fed officials signaled potential rate cuts. Fed Governor Christopher Waller expressed support for a 25 bp rate cut in September and additional cuts in the next six months. San Francisco Fed President Mary Daly suggested recalibrating policy soon, citing potential labor market risks.
Trade Policies and Tariffs:
– President Trump threatened new tariffs on advanced technology and semiconductors.
– Tariffs on steel and aluminum were expanded to include over 400 consumer items.
– The tariff truce with China was extended until November, and tariffs on Indian imports were set to double to 50%.
Market Outlook:
– Federal funds futures indicate an 88% chance of a 25 bp rate cut at the September 16-17 FOMC meeting.
– Earnings for S&P 500 companies in Q2 are expected to rise 9.1% year-over-year, with 82% of companies surpassing profit estimates.
Global Markets:
– Overseas stocks were mixed, with the Euro Stoxx 50 falling to a two-week low, while China’s Shanghai Composite rose.
Interest Rates:
– The 10-year T-note yield increased to 4.227% after the core PCE index rose.
– Losses in T-notes were limited by dovish Fed comments and lower inflation expectations.
– European bond yields rose, with the 10-year German bund yield at 2.724%.
Key European Data:
– German August CPI rose more than expected, indicating sticky inflation.
– German July retail sales fell sharply, the biggest decline in nearly two years.
– German unemployment unexpectedly improved, while labor market strength was evident.
US Stock Movers:
– Chipmakers, led by Marvell Technology (-18%), declined after weak earnings reports.
– Dell Technologies (-8%) led losses in computer hardware stocks.
– Ulta Beauty (-7%) fell despite strong Q2 sales, citing consumer caution.
– Caterpillar (-3%) warned of significant tariff impacts.
– Dollar General (-2%) faced margin pressures despite strong earnings.
Positive Performances:
– Autodesk (+9%) led gainers after strong Q2 results and positive forecasts.
– Ambarella (+16%) and Affirm Holdings (+10%) saw gains after beating earnings expectations.
– Managed healthcare stocks, including Molina Healthcare (+3%) and UnitedHealth Group (+2%), rose.
Earnings Reports (9/2/2025):
– Companies reporting include Academy Sports & Outdoors, HealthEquity, Signet Jewelers, and Zscaler.
Disclaimer:
The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc. For more details, visit the Barchart Disclosure Policy.
Rich Asplund held no positions in the mentioned securities at the time of publication. All information is for informational purposes only.
Source: https://www.nasdaq.com/articles/stocks-settle-lower-tech-shares-selloff
