Last week, markets experienced a bit more volatility driven by a mix of factors including expectations for Federal Reserve policy, new economic data and corporate earnings. The S&P 500 ended the week -0.10%, Dow Jones -0.19% and Nasdaq -0.20%. US Treasury Bond rates were mixed, with the 10 year around 2bps tighter and 30 years 5bps wider, close to the 5% level.
Economic reports painted a mixed picture, with 2Q 2025 GDP data suggesting ongoing economic resilience, while persistent inflation remains a key concern. July's PCE index—the Fed's preferred inflation gauge—showed prices remain stubbornly above the 2% target. Meanwhile, the tech sector led an overall decline in stocks, with AI-related companies such as Nvidia driving the underperformance.
Profit-taking ahead of the Labor Day weekend and in anticipation of September—historically the weakest month for stocks— also contributed to the week's broad market sell-off. For this upcoming week, the US Payroll numbers on Friday will be key to understand better what the Fed will do at the next rates meeting this month, with the market pricing a 90% chance of a 25bps rate cut.
