Stock Market Concludes Robust Month with a Drop: Financial Market Update Today

With the Labor Day holiday approaching, both the equities and bond markets will be closed on Monday, providing a much-needed break for investors.

In recent news, two major tech companies, Dell Technologies and Marvell Technology, reported poor quarterly results. Dell Technologies, led by CEO Michael Dell, experienced a 8.9% stock decline, while Marvell Technology, under the leadership of Matt Murphy, saw a steeper drop of 18.6%.

Caterpillar, a leading manufacturer in the construction industry, has also been in the headlines. The company revised its tariff impact estimate for the third quarter to be between approximately $500 million to $600 million, and for 2025 to be approximately $1.5 to $1.8 billion. Consequently, Caterpillar sank 3.7% after warning that tariff costs could come in higher than initially expected.

The economic landscape isn't entirely gloomy, however. The University of Michigan's Consumer Sentiment Index fell to 58.2 in August from 61.7 in July, but both year-ahead and long-run inflation expectations edged up from July. Joanne Hsu, Surveys of Consumers Director, wrote in the release that these increases were indicative of a growing optimism among consumers despite the recent downturns in the market.

Inflation data for July showed a rise of 0.2% in the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred measure of inflation, with an annual increase of 2.6%. Greg Wilensky, head of U.S. Fixed Income at Janus Henderson Investors, noted that there was more inflation on the services side than the goods side in the latest data.

Looking at the broader market, the Dow Jones Industrial Average closed 0.2% lower at 45,544, the S&P 500 was 0.6% lower at 6,460, and the Nasdaq Composite was off 1.2% at 21,455. Stocks opened in the red in Friday's low-volume session and kept sliding into the close, with Caterpillar being the worst Dow Jones stock on the day.

In a positive note, for all of August, the three benchmarks boasted total returns ranging from 1.8% to 3.6%. José Torres, senior economist at Interactive Brokers, stated that participants were grabbing profits heading into September due to it historically being the worst month for equity returns.

However, Wilensky also said that today's inflation data does not detract the focus from next week's jobs report, which will undoubtedly be a key indicator for the overall health of the economy. Oppenheimer analyst Kristen Owen also highlighted that the updated tariff impact accounts for changes in Section 232 steel and aluminum tariffs announced post-earnings, as well as reciprocal rates with India.

In conclusion, while the market has faced some challenges in recent weeks, investors are keeping a close eye on upcoming economic indicators, particularly the jobs report, to gauge the direction of the market in the coming months.