Stock Buyers Step In to Fuel Bounce From Lows: Markets Wrap

This content was published on August 20, 2025 - 23:02

7 minutes

(Bloomberg) — Stocks rebounded from session lows after a week-long tech selloff, in the latest sign of febrile Wall Street trading ahead of Jerome Powell’s Jackson Hole speech.

Following a rout that shed billions of dollars from US equity values, buyers emerged in the last stretch of Wall Street trading. A renewed slide in big tech and signs inflation remains the predominant concern of Federal Reserve officials weighed on trading Wednesday.

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But at the end of the day, the S&P 500 was down just 0.2%, with most major groups advancing. All megacaps fell, but they also trimmed losses. The Nasdaq 100 closed 0.6% lower after earlier slumping almost 2%.

US stocks are “in the early days” of a bubble, although the critical point for a correction has yet to come, Oaktree Capital Management LP co-founder Howard Marks cautioned.

“Today feels like a test for the dip-buyers with data on PMIs on Thursday and Federal Reserve Chair Jerome Powell at Jackson Hole may prove to be market movers/narrative changers,” Andrew Tyler at JPMorgan Chase & Co. wrote earlier Wednesday.

Treasuries edged up as traders shrugged off the risks of inflation policymakers raised in the latest Fed meeting minutes. Swaps showed traders continued to price in a high probability of lower rates in September.

To Chris Zaccarelli at Northlight Asset Management, Powell is likely to keep his cards close to his vest and emphasize that the Fed cares very much about their dual mandate, explaining that they are data dependent.

“The minutes are consistent with Powell’s hawkish comments last meeting,” said David Russell at TradeStation. “The bulls might get some cold water splashed in their faces at Jackson Hole.”

At Evercore, Marco Casiraghi says the latest Fed minutes are “a bit stale” given economic developments since then, in particular the weaker-than-expected July employment report.

But almost all participants agreed that the Fed “was well positioned to respond in a timely way to potential economic developments,” he noted.

“These considerations support our view that the Fed will cut in September absent a re-tightening in the labor market combined with adverse inflation news,” Casiraghi noted.

Aside from the macro picture, traders continued to keep a close eye on the market’s most-influential group. Megacaps got hit once again — dragging the S&P 500 down for a fourth consecutive session.

While most major groups in the US equity benchmark finished higher, some strategists warn that the extra-heavy weighting of tech giants could turn the “rotation” out of the sector into a broader rout.

“Rotation can only take place if the tech stocks hold up,” said Matt Maley at Miller Tabak. “If they decline, the only rotation we’ll see will be into cash.”

Mark Hackett at Nationwide says we’re seeing a notable drop in leadership, with large-cap growth significantly lagging small caps and value this month.

“Still, volatility and credit spreads remain calm, suggesting investors’ fears are modest,” he said.

At BMO Private Wealth, Carol Schleif says stock valuations are full right now leaving little wiggle room for disappointment.

“The stock market is currently discounting a bright future ahead, and that assessment is largely justified thanks to earnings, which have been much stronger than originally expected and increasing clarity on trade and tax policy,” she said.

Corporate Highlights:

Microsoft Corp. has curtailed Chinese companies’ access to advance notifications about cybersecurity vulnerabilities in its technology after investigating whether a leak led to a series of hacks exploiting flaws in its SharePoint software. Alphabet Inc.’s Google introduced a new slate of consumer gadgets on Wednesday, including several smartphones, a watch and new wireless earbuds, all meant to show off the company’s latest advances in artificial intelligence. Target Corp. named veteran Michael Fiddelke as its next chief executive officer, betting that the insider will revive the storied retailer struggling with weak sales. Off-price retailer TJX Cos. raised its full-year earnings per share outlook after better-than-expected results, a sign that shoppers wary of economic uncertainty are turning to discounters. Estée Lauder Cos. issued a weak profit outlook for its fiscal year, dragged down in part by tariff costs. The firm said it has hired external advisors to conduct a review of the brands it owns in a bid to accelerate a turnaround after years of sales declines. Lowe’s Cos. agreed to buy Foundation Building Materials for about $8.8 billion in cash, accelerating the home-improvement supplier’s push to serve more professional customers. Guess? Inc. will be taken private by Authentic Brands Group LLC in partnership with co-founders Maurice and Paul Marciano and Chief Executive Officer Carlos Alberini. Luxury builder Toll Brothers Inc. missed analysts’ estimates for quarterly orders as affordability challenges and economic uncertainty held back buyers. Thoma Bravo is in advanced talks to buy human resources software provider Dayforce Inc. in what would be one of the takeover firm’s largest-ever deals. Alaska Air Group Inc. debuted a new loyalty program that will let members choose from three options to earn award points, the first such offering in the US industry. Novo Nordisk A/S implemented a global hiring freeze as the Danish drugmaker seeks to cut costs and regain its footing in the competitive market for weight-loss treatments. Baidu Inc.’s revenue slipped slightly, hurt by an economic downturn that’s capping its ability to fight bigger rivals in AI and make inroads in new growth areas. SQM, the world’s biggest lithium producer by market value, boosted its sales guidance for this year and struck a note of optimism on prices after posting a 28% slump in second-quarter core earnings. What Bloomberg Strategists Say…

“The minutes from the meeting are almost a point-by-point refutation of the claims that rates are far above neutral and should be lower. The market is still pricing in 19 basis points of rate cuts next month, which looks optimistic on a first glance at the minutes, most of which reads like an argument for holding.”

— Sebastian Boyd, Macro Strategist, Markets Live

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Some of the main moves in markets:

Stocks

The S&P 500 fell 0.2% as of 4 p.m. New York time The Nasdaq 100 fell 0.6% The Dow Jones Industrial Average was little changed The MSCI World Index fell 0.2% Bloomberg Magnificent 7 Total Return Index fell 1.1% The Russell 2000 Index fell 0.3% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1653 The British pound fell 0.3% to $1.3454 The Japanese yen rose 0.2% to 147.35 per dollar Cryptocurrencies

Bitcoin rose 0.6% to $114,289.95 Ether rose 4.6% to $4,348.16 Bonds

The yield on 10-year Treasuries declined two basis points to 4.28% Germany’s 10-year yield declined three basis points to 2.72% Britain’s 10-year yield declined seven basis points to 4.67% The yield on 2-year Treasuries was little changed at 3.74% The yield on 30-year Treasuries declined two basis points to 4.89% Commodities