US stocks ended August quietly after a volatile month marked by inflation data, AI stock swings, and Fed rate cut hopes. What investors should know.
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Wall Street Set to Close Out a Wild Month on a Subdued Note
New York, August 30, 2025 — Wall Street ended the last trading session of August on a subdued note despite earlier signs of momentum. Investors digested inflation data, corporate earnings reports, and rate cut expectations, all while looking forward to the Labor Day weekend.
The Dow Jones Industrial Average fell 187 points (-0.41%), the S&P 500 dropped 0.73%, and the Nasdaq Composite slipped 1.17%.
Key Highlights
- Dow Jones: Down 187 points (0.41%)
- S&P 500: Down 0.73%
- Nasdaq Composite: Down 1.17%
- PCE Inflation: Up 2.6% YoY — in line with forecasts
- Gold Prices: Up 4.8% in August — best month since April
- S&P 500 Closes Above 6,500 for the First Time Ever
Why Wall Street Slowed Down This Week
After three straight days of gains and record highs earlier this week, stocks faced mild profit-taking. While the July Personal Consumption Expenditures (PCE) data matched expectations, tech stocks underperformed, dragging the broader indexes lower.
The PCE price index — the Federal Reserve’s preferred inflation gauge — rose 2.6% year-over-year, in line with estimates. The core PCE, which excludes volatile food and energy prices, increased 2.9% YoY, marking its hottest pace since February but still meeting market expectations.
“Inflation is increasing ever so slightly, but right in line with forecasts,”
— Chris Zaccarelli, CIO, Northlight Asset Management
Tech Stocks Pull Back After Earnings
The broader market weakness was largely led by tech and AI stocks:
- Nvidia (NVDA) fell 3.1%
- Marvell Technology (MRVL) plunged 16% after weaker-than-expected earnings
Analysts noted that expectations for AI-driven companies remain exceptionally high, but recent earnings haven’t matched the hype.
“Expectations for tech are sky-high… but growth hasn’t been strong enough to push them to the next level,”
— Jay Hatfield, CEO, Infrastructure Capital Advisors
August Was a Wild Ride for Wall Street
Despite today’s dip, August was an eventful and profitable month overall:
- S&P 500: Gained every week of August — first time in 2025
- Dow Jones: On track for its fourth consecutive monthly gain
- Nasdaq: Up five months in a row — its longest winning streak since 2024
- S&P 500 Closed Above 6,500 for the First Time Ever
This rally came amid a mixed macroeconomic environment:
- Trump’s tariffs shook global markets
- A weaker jobs report raised recession fears
- The Federal Reserve signaled possible rate cuts
- AI-driven investor optimism fueled strong buying
Investor Sentiment & Fed Rate Cut Hopes
A significant driver of August’s rally was speculation that the Federal Reserve could cut interest rates as soon as September.
Fed Chair Jerome Powell, speaking at the Jackson Hole Symposium, hinted at possible cuts, citing a slowing labor market and cooling inflation.
Lower borrowing costs would support corporate earnings and boost equity markets, making September a crucial month for traders.
Gold Surges as Investors Hedge Bets
Amid the market uncertainty, gold prices climbed 1% on Friday and are up 4.8% for August, marking the best month since April.
The CBOE Volatility Index (VIX) — Wall Street’s “fear gauge” — traded near its lowest levels of the year, signaling investor confidence despite short-term turbulence.
Historical Context: September Could Be Challenging
While August ended positively overall, September has historically been Wall Street’s weakest month.
Over the past 75 years, the S&P 500 has posted an average decline of 0.7% in September, according to LPL Financial strategist Adam Turnquist.
With key jobs data arriving September 5 and CPI inflation numbers expected on September 11, traders are preparing for heightened volatility.
What to Watch in September 2025
- September 5 → U.S. Jobs Report
- September 11 → CPI Inflation Data
- Federal Reserve Decision on rate cuts
- Earnings updates from Apple, Microsoft, and Nvidia
- Ongoing impact of Trump’s tariffs and legal battles
Final Takeaway
Wall Street ended August quietly but remains on solid ground after a wild, record-setting month. Investors are now shifting their focus to September’s economic data, which could determine the Fed’s next move and market direction.
FAQs
Q1. Why did Wall Street close lower on Friday?
Markets dipped as investors reacted to inflation data and profit-taking after a strong rally earlier in the week.
Q2. What is the PCE index, and why does it matter?
The Personal Consumption Expenditures (PCE) index measures inflation and is the Federal Reserve’s preferred gauge for setting interest rates.
Q3. Why did tech stocks fall despite strong AI growth?
Investors had extremely high expectations for AI companies like Nvidia and Marvell, but their earnings didn’t meet forecasts.
Q4. What should investors watch in September?
Key data releases include the jobs report, CPI inflation numbers, and updates on the Fed’s rate cut decision.
Q5. Is the stock market still bullish?
Yes, despite Friday’s drop, the overall market trend remains positive, with major indexes hitting record highs in August.