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Wall Street

Wall Street Pulls Back as Inflation Tops Fed Target; Nasdaq Leads Slide

U.S. stocks pulled back from record highs on Friday after fresh economic data signaled that inflation remains stubbornly above the Federal Reserve’s 2% target. The update left investors digesting the implications for interest rates ahead of the central bank’s September meeting.

The Dow Jones Industrial Average (^DJI) closed down roughly 0.5%, while the S&P 500 (^GSPC) lost 0.8%. Leading the retreat, the Nasdaq Composite (^IXIC) slipped over 1%, weighed down by a sell-off in major technology names.

Big Tech bore the brunt of Friday’s decline. Nvidia (NVDA) shares dropped more than 3%, coming just days after the chipmaker unveiled its much-anticipated earnings report.

STORY HIGHLIGHTS

  • Dow Jones dropped 0.5%, S&P 500 fell 0.8%, Nasdaq tumbled over 1%.

  • Nvidia stock sank 3% despite strong earnings earlier this week.

  • Core PCE inflation rose 0.3% monthly and 2.9% annually, above Fed’s 2% target.

  • Consumer confidence slid to a three-month low, inflation expectations jumped.

  • Traders still price in 87% chance of Fed rate cut in September.

  • Nasdaq eyes five-month winning streak despite Friday’s losses.

  • Markets closed Monday for Labor Day holiday.

Inflation Data Signals Persistent Pressure

The core Personal Consumption Expenditures (PCE) index, a key metric the Federal Reserve closely monitors, rose 0.3% on a monthly basis and 2.9% annually in July. Both figures were in line with analyst expectations but still well above the Fed’s 2% inflation target.

“The annual increase marks the largest since February,” said an analyst at a leading Wall Street firm. “It reinforces the idea that inflation is sticky, even if it’s not accelerating at a rapid pace.”

Adding to concerns, a University of Michigan survey showed that consumer sentiment dropped to a three-month low, with respondents expecting inflation to pick up over the next year.

Traders Keep Bets on Rate Cuts Despite Hot Data

Despite the hotter-than-desired inflation reading, Wall Street hasn’t shifted dramatically in its expectations for the Federal Reserve’s next move. Market data on Friday indicated that traders still assign an 87% probability to a quarter-point rate cut at the September meeting.

“This PCE report was widely anticipated, and the numbers came in exactly as expected,” noted one market strategist. “For now, the market narrative remains focused on an easing cycle, not a reversal.”

Tech Sector Drags Nasdaq Lower

Technology stocks, which have been leading the market higher in recent months, saw sharp declines Friday. Nvidia (NVDA), a key driver of this year’s tech rally, dropped more than 3%, erasing some of the gains it made after its blockbuster earnings release earlier in the week.

“The profit-taking in Big Tech isn’t surprising after such a strong run,” an equity analyst explained. “Nvidia has been at the center of the AI trade, so even a slight shift in sentiment can lead to big moves.”

Indexes Still on Track for Longest Winning Streak in Months

Despite Friday’s setback, the broader picture for U.S. markets remains upbeat. The Nasdaq Composite is still up about 2% in August, on course for its fifth consecutive monthly gain, the longest winning streak in nearly 18 months.

Similarly, the S&P 500 and the Dow Jones Industrial Average are both headed for their fourth straight month of gains, rising about 1.6% and 2%, respectively — the longest streak since September 2024.

Meanwhile, the Russell 2000 (^RUT), which tracks smaller companies, is set to jump 6% this month, marking its best four-month performance in over four years.

Political Drama Adds to Busy Week

This week wasn’t just about inflation data and earnings. Markets were also watching political headlines after President Trump intensified efforts to remove Fed Governor Lisa Cook. On Friday, a judge was expected to rule on Cook’s request for a temporary restraining order, adding another layer of uncertainty to an already eventful week for investors.

Markets will remain closed on Monday for the Labor Day holiday, reopening Tuesday for what could be another critical week for Wall Street.

Friday’s market pullback highlighted the delicate balance between investor optimism and economic reality. While inflation remains above the Federal Reserve’s target, traders are still betting on a rate cut in September, signaling confidence that policy easing is on the horizon. Despite the day’s losses, the Nasdaq, S&P 500, and Dow Jones remain on track for multi-month winning streaks, underscoring the resilience of U.S. equities. With markets closed for Labor Day, investors will look to next week for fresh cues on whether the Fed will prioritize inflation control or growth momentum in the months ahead.

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NVIDIA Shrugs Off Trump Tariff Wave as $4 Trillion Crown Shines Bright

In a stirring show of poise amid policy tremors, Jensen Huang, CEO of chip giant NVIDIA, has cast aside fears over Donald Trump’s tariff ambitions, voicing unshaken faith in America’s tech resilience. Fresh from a celebratory White House meeting, Huang stood firm on semiconductor self-reliance, calling it vital for security, skill revival, and industrial strength. As Trump eyes tariff talks with China and reshoring strategies, NVIDIA—now the world’s most valuable company—finds itself at the storm’s center, balancing bold success with uncertain trade tides.

STORY HIGHLIGHTS

  • NVIDIA CEO Jensen Huang says U.S. tech firms can endure tariffs, citing past resilience.

  • Trump and Huang met on July 10, celebrating NVIDIA’s $4 trillion market valuation.

  • U.S. semiconductor manufacturing is vital to national security and skilled labor revival, says Huang.

  • NVIDIA relies on Taiwan’s TSMC, which may be impacted by new U.S. tariffs.

  • Company is building supercomputers in Texas and packaging them in Arizona.

  • Huang heads to China next week, but trade deal timeline remains unknown.

As the debate over U.S. tariffs heats up, Jensen Huang, CEO of NVIDIA—the world’s most valuable company—offered a calm and measured outlook during a recent interview, underscoring his confidence in the resilience of America’s tech sector. His comments came just days after a notable White House meeting with former President Donald Trump, where the two discussed key trade, manufacturing, and technology issues.

The moment comes at a time of growing uncertainty, as Trump reintroduces a tough stance on trade and tariffs—particularly with China—while eyeing a broader reshaping of the global technology supply chain. But Huang, at the helm of a company that now sits at the heart of artificial intelligence and chip innovation, appears unshaken.

“We’ve Survived Before, We’ll Survive Again”

In his remarks, Huang noted that the tech industry is no stranger to regulatory and economic challenges. He pointed to the long history of trade policies, tariffs, and other regulatory disruptions that companies have faced.

“Every single year there were rules, taxes, tariffs, policies—we survived,” Huang said.

The NVIDIA founder, whose company just became the first in history to reach a $4 trillion market value, made clear that such obstacles are part of the business landscape—and not a reason to panic. Huang’s own journey, from Taiwan to the top of the American tech world, lends weight to his resilient tone.

“Nobody likes disruptions and no one likes abrupt changes,” he acknowledged, before adding, “But these settlements will—President Trump will settle these deals and countries will reorganize and resettle, and we’ll work through it.”

Trump Congratulates NVIDIA on Market Milestone

The high-level meeting on July 10 between Huang and Trump came just as NVIDIA hit its historic market valuation. Huang described Trump as visibly excited and proud of the achievement.

“He spent a lot of time congratulating me and telling everybody all around him what a great achievement it was,” said Huang, recalling the mood inside the White House.

The meeting marked the fifth time the two had sat down together in recent months—a sign of both Trump’s interest in the booming semiconductor industry and NVIDIA’s rising influence in Washington.

The next day, Huang also met with Treasury Secretary Scott Bessent to continue discussions around manufacturing, trade, and future tech strategies.

Semiconductors, Tariffs, and AI: The Critical Crossroads

At the center of the conversation sits the delicate intersection of artificial intelligence, semiconductor supply chains, and looming U.S. tariffs. NVIDIA designs high-performance chips used in everything from generative AI models to advanced computing systems. But the company doesn’t manufacture those chips itself.

Instead, production is outsourced to major foundries like Taiwan’s TSMC, which would be directly impacted by Trump’s proposed import tariffs. With Trump signaling an aggressive push for reshoring tech manufacturing, the implications for companies like NVIDIA are significant.

Yet Huang insists that such policy shifts, while important, are far from insurmountable.

“I have every confidence that the world is going to survive this,” he said. “Companies will survive this, and whatever it turns out to be, we’ll make the best of it.”

Backing Trump’s Manufacturing Vision

While some in the tech world have expressed concern over Trump’s trade agenda, Huang appears more aligned with certain elements of it—especially when it comes to domestic manufacturing.

Speaking to USA TODAY on July 11, Huang emphasized the need to bring semiconductor production back to the U.S., describing it as both a strategic and societal imperative.

“Absolutely. I believe President Trump’s vision—his bold vision to manufacture in the United States—is great for our industries, it’s great for our society,” said Huang.

He noted that the loss of manufacturing capabilities over recent decades hasn’t just weakened the supply chain—it has taken a toll on American workers, craftspeople, and communities.

“We’ve lost a lot of manufacturing capability and skills,” he said. “That’s really great for skilled craft and people that work with their hands and build things. We want to celebrate that. We want to bring that back to the United States.”

Security, Resilience, and Skilled Labor

For Huang, the manufacturing push is about more than just economics—it’s also about national security and resilience. The ability to control supply chains, especially for something as critical as semiconductors, is key to ensuring stability in an increasingly uncertain world.

“It’s very important to national security, industrial security, supply chain resilience,” he said.

NVIDIA, for its part, has already begun investing in U.S. operations. The company is currently building supercomputers in Texas and packaging them in Arizona, signaling a shift that mirrors the government’s calls for greater self-reliance.

China Trip Ahead, But No Trade Talk Timetable

Huang will travel to China next week. He confirmed that he discussed the trip with Trump, but made clear that no detailed conversations around trade negotiations were held during the White House meeting.

“We did not discuss trade negotiations between the two countries,” Huang said. “I do not know when a final agreement could come to fruition.”

For now, the future of U.S.-China trade remains uncertain. But Huang’s message is clear: NVIDIA will continue to adapt, just as it always has.

As trade winds shift and tariff tensions rise, Jensen Huang’s composed stance signals more than just corporate confidence—it reflects a broader belief in innovation’s ability to weather political storms. With NVIDIA now crowned as the world’s most valuable tech empire, its trajectory underlines a deeper message: resilience, vision, and strategic production can outpace uncertainty. While Trump’s tariff strategies evolve and global negotiations unfold, NVIDIA remains poised at the helm of the AI revolution—undaunted, unwavering, and firmly rooted in both American ambition and global reach.

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