Wall Street opened with modest gains on Friday, with the Dow Jones Industrial Average climbing 85 points, while the S&P 500 edged up 0.09% and the Nasdaq Composite slipped 0.01%. The muted start came as the AI-driven rally lost steam, with investors turning their attention to Federal Reserve Chair Kevin Warsh's first speech at the central bank's annual Jackson Hole symposium.
Warsh speech in focus
Warsh's appearance at Jackson Hole is the main event for markets this week, following a period of mixed inflation data and recent Treasury efforts to stabilize bond markets. Investors are seeking clarity on the Fed's interest-rate path, with money markets pricing in about a 36% chance of a rate hike in September, according to CME's FedWatch tool. Fed funds futures indicate a 64% probability that rates will remain unchanged at the next meeting.
The monetary policy outlook has become more uncertain after recent inflation readings, and Warsh's remarks are expected to provide insight into the Fed's approach. Investors will also monitor the final University of Michigan consumer sentiment reading for August and comments from Chicago Fed President Austan Goolsbee.
Despite Friday's subdued start, the S&P 500, Nasdaq, and Dow are all on track for weekly gains after Thursday's rally, which was driven by Nvidia's strong earnings and outlook. Last week, rising bond yields had pressured equities.
Chip stocks pull back
Semiconductor stocks weakened on Friday after a strong advance the previous day. Nvidia shares slipped 0.2%, while Micron Technology and Intel fell more than 1.5% and 0.5%, respectively. Marvell Technology dropped 7.17% after investors raised concerns about the timing of revenue from its AI chip agreement with Alphabet's Google, despite the company raising its 2027 revenue forecast. Its current-quarter non-GAAP gross margin guidance disappointed investors.
Nvidia's robust forecast had reinforced expectations of sustained AI demand, driving technology stocks higher on Thursday. The Nasdaq Composite, S&P 500, and technology sector each posted their strongest daily performance since Aug. 4. However, Friday's pullback suggests investors are now looking for further catalysts, with questions remaining about the pace of future growth from AI infrastructure investment. For more on this, see why memory stocks are sliding despite Nvidia's boom.
Individual stock movers
Outside tech, company-specific news drove several stocks. Gap shares surged 18.8% after the retailer appointed Michael Francis as CEO of Old Navy and raised its annual profit forecast, aiming to improve performance at its largest brand. PayPal fell 12.5% following reports that a consortium involving Advent and Stripe had abandoned its pursuit of the payments firm. Ulta Beauty slipped 3.1% after comparable-sales growth weakened in the second quarter.
Asian markets ended mixed, with Japan's Nikkei 225 rising 0.41%, while South Korea's Kospi and China's CSI 300 declined. For a broader view on chip stocks, see BofA's outlook on chip stocks. Also, check gold's reaction to Warsh's speech and USD/JPY movements.
This article is for informational purposes only and does not constitute financial advice.
