Stock Market News - Nasdaq 21,455, S&P 6,460, Dow 45,544 Close August Lower as Nvidia Slides, Alibaba Surges

Nasdaq, S&P 500, and Dow Close August with Sharp Reversal

The final trading session of August delivered a sharp pullback across U.S. equities, despite the Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) notching fresh record highs just a day earlier. The Dow Jones closed at 45,544.88, down 0.20%, while the S&P 500 fell 0.64% to 6,460.26. The Nasdaq Composite (^IXIC) led losses, sliding 1.15% to 21,455.55, dragged heavily by technology and semiconductor weakness. The Russell 2000 (^RUT) declined 0.5% to 2,366.42, trimming what had been one of its strongest monthly runs in over four years.

Inflation Data and Fed Pressure Shape Index Moves

Friday’s retreat came after the July core PCE index, the Federal Reserve’s preferred inflation gauge, climbed 0.3% month-over-month and 2.9% year-over-year. The figures were in line with expectations but still well above the Fed’s 2% target, reinforcing debate about whether policymakers will cut rates in September. Futures markets are pricing in an 87% probability of a quarter-point reduction. Meanwhile, President Trump’s renewed attempt to remove Fed Governor Lisa Cook underscored political tension over Fed independence, adding uncertainty to monetary policy direction.

Nvidia (NVDA) Extends Slide, Semiconductors Hit Broadly

Chip stocks bore the brunt of Friday’s selling. Nvidia (NVDA) tumbled 3.3%, continuing a week-long selloff after its data center revenue fell short of investors’ lofty expectations. Broadcom (AVGO) slid 3.65%, Marvell Technology (MRVL) collapsed 17% on weak guidance, and Advanced Micro Devices (AMD) and Lam Research (LRCX) lost over 3% each. The PHLX Semiconductor Index (SOX) shed more than 3%, intensifying fears that AI-driven optimism has peaked in the short term. Investors remain wary after reports that Alibaba (BABA) is developing advanced AI chips, raising competitive threats to U.S. chipmakers already constrained by Washington’s export bans.

Alibaba (BABA) Surges on AI Revenue Growth

In sharp contrast to U.S. chipmakers, Alibaba (BABA) soared 12.9% to $135.00 after reporting 247.7 billion yuan ($34.1 billion) in quarterly revenue, with AI-related sales climbing triple digits. Cloud division sales jumped 26%, offsetting profit declines tied to China’s food delivery price war with JD.com (JD) and Meituan (3690.HK). Despite a 3% drop in operating income to 35 billion yuan ($4.9 billion), investors cheered Alibaba’s expansion into AI and chip design, positioning the company as a potential challenger to Nvidia’s dominance.
Last Analysis - Alibaba Stock Analysis

Corporate Earnings Shake Individual Stocks

The end of August was marked by volatility in post-earnings moves. Dell Technologies (DELL) plunged nearly 9%, erasing YTD gains, after guiding Q3 profit below expectations despite Q2 revenue of $29.78 billion, up 19% year-over-year. AI-related server shipments hit $10 billion in the first half, with guidance raised to $20 billion for FY26, but weakness in PC sales dragged on sentiment. Ulta Beauty (ULTA) slumped 7.14% to $492.73 after an initial rally on raised guidance, showing investors remain cautious on discretionary retailers under tariff pressure. Meanwhile, Autodesk (ADSK) jumped 9.1% after posting $1.76 billion in quarterly revenue, up 17%, with strength tied to AI data center demand.

Affirm (AFRM) and SentinelOne (S) Deliver Standout Gains

Fintech name Affirm (AFRM) surged over 20% after swinging to a quarterly profit of $0.20 per share on revenue of $876 million, beating estimates. Gross merchandise volume guidance above $46 billion for fiscal 2026 underscored resilient BNPL demand. Cybersecurity firm SentinelOne (S) gained nearly 6% as ARR crossed $1 billion, boosted by AI-driven demand for defensive tools. Analysts see cybersecurity spending growth of 9.8% in 2025, far outpacing broader software budgets at 3.6%, making the sector one of the few secular growth plays amid broader tech volatility.

Caterpillar (CAT) and Tariff Fallout

The tariff debate reached a critical flashpoint as an appeals court deemed most of Trump’s trade levies illegal. Yet Caterpillar (CAT) shares still fell 4.5% after projecting tariffs could cost $1.5–$1.8 billion in 2025, up from prior guidance of $1.3–$1.5 billion. The heavy equipment giant warned its adjusted operating margin will land at the low end of forecasts as trade uncertainty clouds industrial demand. Despite Friday’s drop, CAT remains up 15% YTD, outperforming the broader Dow Jones.

Treasury Yields, Dollar, Oil, and Gold Moves

The 10-year Treasury yield climbed to 4.233%, pressuring equity valuations while underscoring bond investors’ concern about sticky inflation. The Dollar Index (DXY) ticked up to 97.86, reflecting safe-haven flows. WTI crude (CL=F) slipped 0.9% to $64.01 per barrel, while Brent (BZ=F) hovered slightly higher, as demand worries re-emerged after a short rebound. Gold (XAU/USD) rallied 1.2% to $3,515/oz, just shy of its record $3,534.20, benefiting from tariff-related uncertainty and expectations of rate cuts.

Berkshire Hathaway (BRK.B) and Dividend Themes

Investors seeking defensive exposure turned to dividend-focused assets. Berkshire Hathaway (BRK.B) is up 10.1% YTD, trailing the S&P 500’s 10.6% but offering a massive $344 billion cash pile that positions it defensively as Warren Buffett prepares to hand CEO duties to Greg Abel in 2026. Dividend stocks also gained traction: Medtronic (MDT) (3.1% yield, 48 straight hikes), NextEra Energy (NEE) (3% yield, 31 years of raises), and Realty Income (O) (5.5% yield, 30 years of increases) all drew investor interest. The Schwab U.S. Dividend Equity ETF (SCHD), with a 3.9% yield, continues to attract flows as an alternative to stock picking in volatile markets.

Crypto and Bitcoin Pressure Under Fed Clouds

Bitcoin (BTC-USD) retreated to $108,708, down from an overnight high of $112,600 and well off its mid-August record above $124,000. Trump’s challenge to Fed independence reignited speculation over crypto adoption, with some viewing Bitcoin as a hedge against political risk. Yet liquidity pressures and profit-taking after July’s rally keep digital assets volatile heading into September.

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