Tech Selloff Drags Stocks From Records as Wall Street Braces for Seasonal Volatility – US Market Wrap

Wall Street traders drove stocks lower amid a selloff in tech stocks, which had powered the rally since April’s meltdown. This is despite the fact that inflation data did little to change bets on Federal Reserve rate cuts, with bonds and the dollar little changed.

A rout in the S&P 500’s most influential group drove the index lower from a record set at the end of a strong August. The Nasdaq 100 declined 1.2%. The market is bracing for what is traditionally the weakest month for US stocks, as institutional investors rebalance, retail traders slow their buying, and volatility rises.

While macroeconomic events are generally more important in determining market direction, seasonal factors can exacerbate moves triggered by economic data or monetary policy. In July, US consumer spending increased by the most in four months, indicating resilient demand in the face of persistent inflation.
And that comes ahead of the all-important jobs report next week, which will be critical in determining the pace of Fed rate cuts by year-end.
Fed Bank of San Francisco President Mary Daly suggested that policymakers will be ready to lower interest rates soon, and that tariff-induced inflation will likely be temporary.

Despite Friday’s drop, the S&P 500 has now gained for the fourth consecutive month. Nvidia led losses in megacaps, while Alphabet gained. AI infrastructure shares fell after Marvell Technology’s outlook raised concerns about demand for data-center equipment.
Short-dated Treasuries performed better, with the two-year yield falling two basis points to 3.61%. Despite a monthly slide, the dollar remained relatively stable.