U.S. stocks ended mixed as a rotation out of technology dragged the Nasdaq and S&P 500 lower, while investors awaited policy cues from Federal Reserve officials gathering at Jackson Hole this week.
Rotation dents tech; defensives rise
Technology shares, which had powered much of the rebound from April’s slump, retreated as investors shifted toward less highly valued sectors. The S&P 500 technology index fell, while energy, healthcare and consumer staples advanced.
According to Reuters, preliminary data showed the S&P 500 down 0.26% to 6,394.97 and the Nasdaq Composite off 0.68% to 21,170.19. The Dow Jones Industrial Average was little changed, edging up 1.48 points to 44,923.75.
Allspring senior portfolio manager Bryant van Cronkhite described the move as rotation rather than a “true sell off,” citing extended tech valuations against elevated spending and more attractive opportunities elsewhere.
Chipmakers including Nvidia, Advanced Micro Devices, Intel and Micron declined. Nvidia’s August 27 results are in focus for indications on artificial intelligence demand. Other megacap growth names such as Apple and Meta also came under pressure.
AI sentiment and policy headlines weigh
Analysts pointed to commentary and research tempering AI enthusiasm. OpenAI CEO Sam Altman’s remark last week that AI stocks are “in a bubble,” along with a Massachusetts Institute of Technology study indicating challenges turning AI into profits, were cited among drivers of the pullback.
Some investors also monitored potential government involvement in the private sector. The administration is examining taking equity stakes in chipmakers such as Intel, following recent revenue-sharing agreements with Nvidia and AMD.
Fed watch and retail earnings in the spotlight
Minutes from the Fed’s July meeting showed almost all policymakers favored holding the federal funds rate at 4.25% to 4.50%, with two dissenters. Chair Jerome Powell is expected to speak at the central bank’s Jackson Hole conference, and investors are pricing a 25-basis-point rate cut in September, Reuters reported.
Political scrutiny intersected with central bank developments as investors tracked a call for the resignation of Fed Governor Lisa Cook, citing allegations related to mortgage fraud.
Retail earnings added to the cautious tone. Target tumbled after naming a new CEO while retaining its annual forecast previously lowered in May. Estee Lauder fell after tariff-related headwinds weighed on its annual profit forecast.
Market participants also weighed sentiment pressures tied to concerns that tariffs could lift prices, with upcoming retailer results viewed as a gauge of U.S. consumer health.
