Stocks Start Week on Defense Ahead of PCE, Nvidia

Published as of: August 25, 2025, 9:10 a.m. ET

(Monday market open) After Federal Reserve Chairman Jerome Powell stirred the market's risk appetite Friday by hinting at rate cuts, investors gear up for a late summer picnic of inflation, economic growth, and housing data this week. The main course, though, is Nvidia (NVDA), which reports Wednesday after a recent swoon in the tech sector. The tech-heavy Nasdaq Composite fell slightly last week despite Friday's gains, and major indexes, Treasuries, and cryptocurrencies slipped early today as some of Friday's warm feelings dissipated.

"The key line from Powell's speech was that the current situation 'may warrant adjusting the policy stance,'" said Cooper Howard, director, fixed income strategy at the Schwab Center for Financial Research. "We believe that the Fed will cut in September and then one more time this year, likely in December." Powell doesn't get the last word even if it was his final Jackson Hole symposium as Fed chair. Speeches from several Fed policy makers loom, including Dallas Fed President Lorie Logan and New York Fed President John Williams today, and inflation fears haven't necessarily receded. Still, investors now bake in 83% odds of a rate cut next month, up from 70% before Powell's speech, according to the CME FedWatch Tool.

On Friday, the Dow Jones Industrial Average posted a new record high—the first it's achieved this year. The S&P 500 index just missed its all-time peak close but rose 1.5%, and tech stocks clawed back from their recent slumber while small caps rose nearly 4% on hopes for lower rates. Overall, the rally appeared fueled by persistent "buy the dip" sentiment, especially among retail traders. This week builds to Friday's July Personal Consumption Expenditures (PCE) price index—one of the Fed's preferred inflation gauges. Coming days also feature a full slate of Treasury auctions—including 3-month and 6-month auctions today. Data kick off with July new home sales at 10 a.m. ET.

1. Nvidia results could pack a wallop: Earnings from Nvidia may carry more weight following the tech sector's recent stumble. Heading into the news, Nvidia's value is about 8% of the S&P 500's market capitalization, the highest of any stock going back to 1981, according to CNBC. "This is no longer just a quarterly earnings release but a macro market event that warrants attention even if you aren't directly invested in Nvidia shares," said Alex Coffey, senior trading and derivatives strategist at Schwab. Just for perspective, Nvidia alone accounts for more than 25% of the S&P 500's total return this year, according to S&P Dow Jones Indices. A disappointment from the company would chip at the foundations of this year's rally. Some factors that may move shares of the chip giant include any change in margins—which slipped earlier this year—and any guidance on China now that Nvidia can sell its H20 chips there again. China has encouraged local companies not to use the H20, and media reports last week said Nvidia is working with the Chinese government to ease Beijing's security concerns. There's also heavy focus on expectations for AI spending from major data center companies.
    
2. Lumber leads: There's a little-known saying that lumber traders like to throw around: "lumber leads." It's a way of conveying the idea that lumber tends to serve as a gauge for economic activity in the U.S. due to its direct ties to housing, construction, and, in turn, credit markets. And lately, lumber has been leading in the wrong direction. Futures for the underfollowed commodity have plummeted in August, from above $695 per thousand board feet on the first of the month to $604 on Friday. The retreat comes despite the threat of tariffs from President Trump, and a more than 50% jump in countervailing and anti-dumping duties on Canadian softwood lumber (which makes up roughly 25% of the softwood lumber consumed in the U.S.). Falling lumber prices could be a sign that home builders are pulling back as consumers' ability—and desire—to buy homes fades with mortgage rates remaining elevated and the labor market cooling. Or they could potentially signal something even more ominous: Economic growth decelerating. For now, lumber's weakness is just another data point worth monitoring. A turnaround could be on the way. But while investors often ignore this commodity's price swings until they become truly volatile, it's always useful to remember the old trader maxim: lumber leads.
    
3. Fed policy hopes cross the seas: Powell's speech Friday went beyond the borders in terms of stock impact, as major European indexes and U.K. markets hit record highs. The U.S. stock pullback earlier last week didn't occur in Europe, and recent S&P Global manufacturing and services data reinforced ideas that economies there remain solid. "We believe stocks of European companies belong in a diversified portfolio due to the potential for an acceleration in longer-term growth as well as attractive valuations," said Michelle Gibley, director of international research at the Schwab Center for Financial Research. "Additionally, any resumption of dollar weakness—perhaps as expectations grow that Fed policymakers will cut interest rates, while the European Central Bank (ECB) may be at or near the end of its rate cutting cycle—potentially would add to international stock returns. A stronger euro relative to the U.S. dollar means returns denominated in euros exchange into more dollars, which boosts returns for U.S. investors."

• Bitcoin (BTC) dove nearly 5% early today after surging 4% Friday and traded this morning at more than one-month lows. Crypto-related stocks including Coinbase (COIN) and Strategy (MSTR), which rose around 6% Friday, dropped 2% to 3% early Monday. Though it's unclear exactly what's causing today's weakness, some reports suggested one major crypto holder was liquidating positions.
   
• Keurig Dr Pepper (KDP) dropped 4.9% after it agreed to buy Dutch coffee company JDE Peet's for $18 billion in what the company called its chance to create a global coffee giant. Declining coffee pod and Keurig coffee maker shipments have caused sales to shrink at Keurig Dr Pepper's U.S. coffee division, CNBC noted.
   
• Intel (INTC) edged up 2% early today after the U.S. government announced late Friday it has a 10% stake in the semiconductor firm. The U.S. government will receive 433.3 million shares of common stock.
   
• Wayfair (W) fell more than 7% early Monday and other furniture firms including RH (RH) and Williams-Sonoma (WSM) also fell sharply after Reuters reported the Trump administration could announce higher tariffs on furniture imports.
   
• Magnificent Seven stocks, after sagging most of last week, all rose Friday and were led by 5% gains from Tesla (TSLA). Microsoft (MSFT) rose less than 1% to bring up the rear.
   
• Uber (UBER) fell 1% ahead of the open after Wedbush cited slower traffic trends.
   
• Financial stocks were big gainers Friday along with transports on hopes lower rates could put a charge into the U.S. economy. Airlines, automakers, Wall Street banks, and homebuilders also got a boost from rate hopes. The Nasdaq Bank Index (BANK) rose 4% and the Dow Jones Transportation Average ($DJT) jumped 3%.
   
• Semiconductors, battered by softness earlier last week, rebounded Friday as the PHLX Semiconductor Index (SOX) rose more than 3%. Nvidia broke a losing streak but gained less than 2% amid possible position squaring ahead of Wednesday's earnings. Intel led chips with a 7% rise, while shares of other slumping tech firms including Palantir (PLTR) and Oracle (ORCL) also clawed back.
   
• FedEx (FDX) rose 5% and United Parcel Service (UPS) added 2.8% Friday on hopes for stronger business and consumer demand if rates drop.
   
• As homebuilder stocks rose Friday, so did shares of companies that serve homeowners and builders, including a 6% gain for Whirlpool (WHR) and a 4% rise for Home Depot (HD).
   
• The Russell 2000^® Index (RUT) of small cap firms outpaced its larger brethren Friday with a 3.9% gain, buttressed by hopes that lower rates would make life easier for small firms that tend to rely more on borrowing. Strength in financials—heavily represented in the Russell 2000—also lifted the index, but it still closed well below the peaks posted late last year and shy of its November 2021 all-time high close.

The S&P 500 index (SPX—candlesticks) just missed closing at an all-time high Friday, rising 1.52%. The all-time high close is 6,468, which the index did surpass intraday Friday before fading late. The index slumped in the days leading up to Friday, and momentum in the Relative Strength Index (RSI—bottom chart) lost ground as well. However, when the SPX rose to highs earlier this month, the RSI also rose, meaning it's been keeping up with the index. Sometimes, a drop in RSI while the index is rising can indicate coming weakness, but that wasn't the case this time. It's still something to watch for in coming days, especially with September historically being tough for stocks.