Macro Events & News
The week began with a selloff led by technology names, as sentiment remained cautious in the face of rising inflation, ongoing tariff uncertainty, and doubts about the payoff from heavy AI spending. OpenAI’s Sam Altman added to the unease, noting that investors had become “overexcited” about AI. Earnings reports from software firms such as Intuit (NASDAQ:INTU) and Workday (NASDAQ:WDAY) did little to ease concerns, as both offered disappointing guidance.
Some optimism surfaced midweek when the flash S&P Global U.S. Purchasing Managers Index (PMI) for August came in at 55.4, signaling growth for the 31st consecutive month and surprising to the upside. Yet the positive headline was offset by warnings from manufacturers and service providers who reported steep increases in input costs, suggesting inflationary pressures are likely to re-emerge with a lag.
On the trade front, progress with the EU and Canada toward lowering tariff rates failed to provide lasting reassurance. Investors remained focused on the inflationary effects of tariffs more broadly, which have been reinforced in recent reports and by business leaders’ commentary. The impasse between the U.S. and India only added to tensions, with a sharp escalation looming as tariffs on all Indian imports are set to rise to 50% on August 27.
The tone shifted dramatically on Friday when Federal Reserve Chair Jerome Powell spoke at the Jackson Hole conference. His comments, which opened the door to potential rate cuts as early as September in response to labor market and inflation concerns, sparked a broad rally and turned what had been a tense week into a more constructive finish.
The 10-year Treasury yield fell back during the week to 4.26% after Powell’s speech. The VIX retreated to 14.22.
All the major indexes were slightly higher this week: the Dow up 1.5%, the S&P 500 up 0.2%, and the Nasdaq relatively flat.
Watchlist News
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Adobe Inc (NASDAQ:ADBE) received an affirmation of a “Buy” rating from RBC Capital, accompanied by a $480 price target, which appears to have boosted investor confidence.
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Salesforce Inc (NYSE:CRM) did not have any major company-specific news this week, suggesting the late-week rally may owe more to general market momentum and its technical setup.
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IBM Corporation (NYSE:IBM) did not have any major company-specific news this week, suggesting the late-week rally may owe more to general market momentum and its technical setup.
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Tesla Inc (NASDAQ:TSLA) responded on Friday with a 6% uptick on Friday after Fed Chair Powell’s speech. There were also positive developments over the week including price increases for high end Cybertruck variations and updated IRS guidance extending eligibility for the $7,500 EV tax credit.
