US stocks retreated on Monday, pausing after last week’s powerful rally fueled by expectations of potential rate cuts later this year. Investors shifted their attention toward upcoming Nvidia’s earnings reports, particularly from Nvidia, and fresh inflation data due at the end of the week.
The Dow Jones Industrial Average (^DJI) declined more than 300 points, or about 0.8%, after closing Friday at its first record high of 2025. The S&P 500 (^GSPC) slipped 0.4%, while the Nasdaq Composite (^IXIC) erased earlier gains to finish down 0.2%. The pullback reflected a combination of profit-taking and a stronger US dollar, which weighed on equities after the sharp advance seen in the prior session.
Last week, the Dow surged more than 800 points, or 1.8%, to finish at 45,631.74, marking a historic high. The rally came as investors welcomed signals from Federal Reserve Chair Jerome Powell that monetary policy could ease in the months ahead. The shift in sentiment provided momentum across major indexes, with technology shares leading gains.
However, Monday’s session showed a more cautious tone. Market participants appeared unwilling to extend the rally ahead of a critical stretch of corporate results and economic releases. Technology shares, which had driven much of the recent market strength, were mixed as traders awaited Nvidia’s earnings report due Wednesday after the closing bell.
Spotlight on Nvidia and Tech Earnings
Nvidia (NVDA) has become the most valuable stock in the S&P 500 and a key driver of this year’s market performance. Analysts forecast the chipmaker will report Nvidia’s earnings of $1.01 per share on revenue of $46.13 billion, underscoring expectations of robust demand for artificial intelligence (AI) hardware. Optimism has lifted the stock near record highs, with shares up 32% year to date and nearly doubling since the market’s April low.
Given its influence, Nvidia’s results are viewed as a bellwether for both the broader technology sector and overall market momentum. A strong report could reinforce confidence in continued AI-driven growth, while any signs of slowing demand could spark volatility. Alongside Nvidia, Dell Technologies (DELL) and Marvell Technology (MRVL) are set to report later this week, further shaping sentiment around enterprise and semiconductor spending trends.
Inflation Data to Guide Market Outlook
Beyond Nvidia’s earnings, the market’s attention will turn to Friday’s Personal Consumption Expenditures (PCE) inflation report, the Federal Reserve’s preferred inflation measure. Economists expect core PCE to rise 2.9% year over year in July, slightly higher than June’s 2.8%. While the report is not expected to shift expectations drastically, even marginal changes in inflation dynamics could influence the outlook for monetary policy and investor positioning.
Despite Monday’s pullback, market strategists noted that overall momentum remains intact. The combination of resilient corporate earnings and optimism around easing financial conditions has created a favorable backdrop for equities in 2025. However, with valuations stretched in certain areas, particularly within technology, short-term volatility may increase as traders digest Nvidia’s earnings and macroeconomic data.
Looking ahead, the balance of the week is expected to bring heightened market activity. Nvidia’s earnings will act as a key test of investor confidence in AI-related growth, while the PCE inflation release could provide clarity on the path forward for interest rates. Together, these developments will help determine whether the stock market extends its record-setting run or enters a period of consolidation.
For now, Wall Street’s pullback reflects a measured stance. Investors remain broadly optimistic but are choosing to reassess positions ahead of potentially market-moving catalysts. The week ahead will likely set the tone for equity performance into the end of the summer and beyond.
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Sources: https://www.reuters.com/world/china/global-markets-wrapup-8-graphic-2025-08-25
