US Stock Market Retreats as Inflation Concerns Resurface; Dow, S&P 500, and Nasdaq End Fourth Consecutive Month Lower

Highlights:

• U.S. stock indices declined on August 29, 2025, following the release of inflation data that exceeded the Federal Reserve’s target.

• The Personal Consumption Expenditures (PCE) Price Index rose 2.6% year-over-year in July, while the core PCE increased by 2.9%.

• Despite the inflation uptick, markets anticipate a 25-basis-point rate cut by the Fed in September.

• Tech stocks, including Dell and Nvidia, experienced significant losses, contributing to the broader market downturn.

Market Overview: Inflation Data Stirs Concerns
U.S. stock markets experienced a downturn on August 29, 2025, as investors reacted to inflation data indicating rising consumer prices. The Commerce Department reported that the PCE Price Index increased by 0.2% in July, bringing the annual rate to 2.6%. Core PCE, which excludes food and energy, rose 0.3% for the month and 2.9% year-over-year.

These figures, while in line with expectations, reignited concerns about persistent inflation and its potential impact on monetary policy. The expiration of a tariff exemption for U.S. package imports under $800 further exacerbated worries, suggesting that tariffs might be contributing to rising prices.

Tech Sector Faces Headwinds
The technology sector led the market decline, with notable losses in major companies. Dell Technologies’ stock plummeted nearly 9% after the company issued a cautious outlook, citing increased manufacturing costs for AI-optimized servers and heightened competition. Similarly, Nvidia’s shares fell 3.4%, continuing a downward trend following a quarterly report that failed to meet investor expectations.

Federal Reserve’s Policy Outlook
Despite the uptick in inflation, markets are pricing in a 25-basis-point rate cut by the Federal Reserve in its upcoming September meeting. This expectation is bolstered by recent comments from Fed officials and signs of a cooling labor market. However, some analysts caution that persistent inflationary pressures could influence the Fed’s decision-making process.

Closing Thoughts: Navigating Uncertainty
As the fourth quarter approaches, investors face a complex economic landscape characterized by rising inflation, potential shifts in monetary policy, and volatility in key sectors like technology. The upcoming nonfarm payrolls report will provide further insights into the labor market’s health, which could influence the Fed’s policy stance. Market participants will need to stay informed and agile, balancing the prospects of rate cuts with the challenges posed by persistent inflationary trends.