Tech Tumbles, All Eyes on Nvidia

by Christine Short of Wall Street Horizon, 8/26/25

Takeaways

  • After what started as a rough week for tech, positive remarks from Fed Reserve Chairman Jay Powell pulled the major indices out of the red

  • Q2 reports to watch this week: Nvidia, Abercrombie and Fitch, Gap, Urban Outfitters, Kohl’s, Burlington Stores, Alibaba, Ulta and more

  • Q3 earnings season begins on October 14 when JPMorgan, Citigroup, Goldman Sachs and Wells Fargo report

The Fed to the Rescue

Last week, a tech rout that began on Tuesday led to notable declines in the Nasdaq Composite (-2.5%) and S&P 500 (-1.2%) by market close on Thursday, with the Dow Jones Industrial Average roughly flat. Investors engaged in profit-taking, amidst concerns about the high valuations of many technology companies. Palantir, a defense AI company, was a notable example. Despite impressive Q2 earnings that drove the stock to a record high of $190, that price movement resulted in an over-heated P/E ratio of 193 that had investors retreating. The typically light trading volume in August, with fewer investors actively engaged, also contributed to these wider-than-usual market swings.

But by Friday, those losses had turned around when Federal Reserve Chairman, Jerome Powell, gave promising remarks regarding interest rate cuts during his annual address at Jackson Hole. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” he said. He noted that while the US labor market remains resilient, those risks are creeping up, as are the risks of tariff inflation.1 As a result of these comments, the CME Group’s FedWatch tool saw the probability of a September rate cut jump to 87.3% from 75% the day prior.2 The S&P 500 and DJIA ended the week higher, with the latter reaching an all-time high. The Nasdaq Composite still ended the week 0.56% lower.