Index movements

The last week of August closed with mixed results in New York. After reaching new record highs driven by corporate earnings and expectations of rate cuts, the main indexes gave up ground in the final sessions:

• The Dow Jones slipped 0.2% for the week, finishing at 45,544.88 points.

• The S&P 500 fell 0.6% in Friday’s session to 6,460.26 points, though it gained 1.9% for the month.

• The Nasdaq Composite lost 1.2% on Friday and ended the week down about 0.2%.

This performance reflects profit-taking after a rally fueled by the belief that the Federal Reserve may soon begin an easing cycle.

Monetary policy and expectations

The Fed was once again at the center of attention. Most of the market expects the first rate cut in more than a year to take place in September, with bets split between a 25- and a 50-basis-point move.

Major investment banks such as Morgan Stanley and BNP Paribas project a path of cuts extending into 2026, with the policy rate eventually reaching the 2.75%–3.00% range. Still, core inflation at 2.9% keeps uncertainty alive regarding how aggressive the Fed can be.

Adding to the mix, political interference attempts raised concerns about the central bank’s independence, contributing to volatility during the week.

Corporate results and sector highlights

• Nvidia once again stole the spotlight with a 56% revenue surge, fueling the artificial intelligence rally and pushing the S&P 500 and Dow to new records on Thursday, August 28.

• A day later, however, the market turned lower, dragged down by losses in Dell, Marvell, Oracle, and even Nvidia itself as expectations were adjusted.

• Consumer-related stocks showed weakness on softer confidence data, while energy and industrials held firm, supported by optimism around potential rate cuts.

Macro data and outlook

The Fed’s preferred inflation gauge, the PCE index, remained at 2.6% year over year, though the core reading ticked higher. Consumer confidence and spending also suggested a modest economic slowdown, reinforcing the idea that monetary policy tightening is weighing on growth.

Looking ahead to September, the jobs report will be crucial in determining whether the Fed begins cutting rates — and by how much.

Conclusion

August was a month of contrasts: Wall Street hit historic highs thanks to AI momentum and hopes for lower rates, only to end with a cautious pullback as investors await fresh economic data. Markets remain caught between optimism and prudence, with the Fed’s next move in focus.

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Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report