US stocks fell on Friday as investors digested fresh inflation data and the aftermath of Nvidia’s earnings report. The Dow Jones Industrial Average (DJI) slipped roughly 0.5% to 45,470, while the S&P 500 (GSPC) fell 0.8% to 6,435. The Nasdaq Composite (IXIC) led the decline, dropping more than 1% as tech stocks came under pressure.
The retreat comes after a week of record highs for the major indices, as traders reassessed the implications of July’s inflation readings and investor sentiment shifted following Nvidia’s mixed earnings report. The markets are weighing the Federal Reserve’s next moves, as signs of inflation could complicate expectations of a potential rate cut later this year.
Market Movers:
- Nvidia (NVDA) –3.38%: Nvidia led the tech selloff after its highly anticipated earnings report. While the company beat revenue estimates, investors were concerned about slowing growth in its AI data center segment, which has been the main driver of its stock surge this year. Analysts also pointed to rising operational costs and increased competition in the AI chip market as potential headwinds.
- Apple (AAPL) –1.2%: Shares fell as investors digested the implications of rising consumer prices on discretionary spending. Despite strong sales of iPhones and services, higher inflation may pressure margins and reduce demand for premium products. Analysts noted that Apple’s global supply chain faces continued tariff-related and shipping costs, which could further weigh on profits.
- Microsoft (MSFT) –0.9%: Microsoft declined slightly after the release of inflation data, even as its cloud and enterprise divisions continued to show growth. Investors are cautious that higher prices could slow corporate IT spending, affecting revenue in the long term. Additionally, the tech giant is navigating stiff competition in the cloud market, which may temper optimism.
- Tesla (TSLA) –1.5%: Tesla pulled back after several days of strong momentum, with investors factoring in rising input costs for batteries and raw materials. The EV maker’s ambitious production goals could be challenged if inflation impacts supply chain efficiency. Analysts also point to potential demand sensitivity as EV prices rise and consumers face tighter budgets.
- Amazon (AMZN) –1.1%: Amazon dipped as investors reevaluated the company’s retail and cloud performance amid inflation concerns. Rising shipping and labor costs could pressure margins, even as e-commerce demand remains robust. AWS continues to be a strong revenue driver, but analysts warn that macroeconomic headwinds may temper growth expectations.
Inflation Data Keeps Investors Cautious
Friday’s consumer inflation report highlighted that prices continue to rise above the Fed’s 2% target. The core Personal Consumption Expenditures (PCE) index increased 0.3% month-over-month in July, matching expectations, signaling that inflation remains resilient. The report adds nuance to the Fed’s policy outlook. Persistent inflation may reduce the likelihood of a near-term rate cut, even as markets had hoped for easier monetary conditions to support economic growth. Investors are closely monitoring upcoming retail sales and employment data for additional clues on how consumer demand is holding up.
Tech Sector Volatility After Nvidia Earnings
The technology sector remains under scrutiny after Nvidia’s earnings report earlier this week. While the company beat revenue estimates, forward guidance raised concerns about potential slowing momentum in AI demand. This has had ripple effects across AI-related and semiconductor stocks, as traders reassess valuations for tech companies that benefited from the recent AI boom. Leveraged ETFs tracking tech-heavy indices also experienced volatility, highlighting the sensitivity of these instruments to single-stock earnings events.
Looking Ahead
As we head into next week, investors will be focused on the broader economic data pipeline and corporate earnings updates. Any surprises in inflation or consumer spending figures could trigger additional volatility in tech stocks, while the Fed’s policy trajectory remains a key determinant of market sentiment. Analysts suggest that the interplay between robust corporate earnings and persistent inflation pressures will shape trading patterns as markets approach the Labor Day weekend.