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Market Focus

Powell Hints at September Rate Cut

On August 22, Powell delivered a speech at the Jackson Hole Economic Symposium, suggesting that an adjustment in monetary policy stance could be "imminent," rapidly fueling expectations for a September rate cut. 

Powell stated that the Fed’s current interest rate level is closer to "neutral" compared to last year. Against the backdrop of maintained restrictive policy, based on changes in the economic outlook and risk balance, an adjustment in monetary policy stance may be necessary. He reiterated that the Fed will always balance its dual mandate of achieving maximum employment and price stability. 

Nick Timiraos of The Wall Street Journal, often referred to as the "Fed Whisperer," noted that while Powell signaled a September rate cut, he also hinted that markets should not expect an aggressive easing cycle akin to a "downhill sprint." Powell is walking a tightrope between an increasingly weak and "peculiar" labor market and persistent inflationary pressures driven by tariffs. This complex economic landscape, coupled with internal divisions at the Fed, suggests that any future rate cuts will be restrained and gradual, aimed at guiding the economy toward a challenging soft landing. 

Goldman Sachs believes that if the nonfarm payroll growth for September comes in below 100,000, it would help solidify the case for a September rate cut. However, the firm also pointed out that multiple factors could lead to negative revisions in future employment data. The current three-month average employment growth of 35,000 is concerning. Whether in a slowdown or normalization scenario, the Fed is likely to end its rate-cutting cycle by the first half of 2026. According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut in September currently stands at 87.2%. 

Source: CME

Fed’s Preferred Inflation Gauge—PCE—Set for Release on Friday

The U.S. Personal Consumption Expenditures (PCE) Price Index for July is scheduled for release at 8:30 AM ET on August 28. 

Market expectations are for the core PCE index to remain unchanged at 0.3% month-over-month, with a slight year-over-year increase to 2.9%. The PCE inflation data plays a critical role in influencing the Fed’s policy decisions, and this release could shape market expectations for a September rate cut. 

Source: BEA

U.S. Trade Delegation’s Visit to India Canceled 

On August 6, U.S. President Trump signed an executive order imposing an additional 25% tariff on Indian imports, citing India’s "direct or indirect importation of Russian oil." This brings the total tariff rate on Indian goods to 50%. 

According to an executive order signed by Trump on July 31, the U.S. began levying a 25% tariff on Indian goods on August 7. The additional tariff announced on August 6, when combined with the previous tariff, results in an overall 50% tariff rate on Indian imports. The new measures are set to take effect 21 days after the announcement, starting August 27. 

India’s Ministry of External Affairs strongly opposed the U.S. tariff hike, calling it "unfair, unjust, and unreasonable," and vowed to "take all necessary actions" to protect national interests. Additionally, the U.S. trade delegation’s planned visit to India from August 25 to 29 has been canceled, casting doubt on the prospects for future negotiations. 

Canada Cancels Multiple Retaliatory Tariffs on U.S. Goods 

On August 22, Canadian Prime Minister Mark Carney announced at a press conference in Ottawa that Canada will cancel retaliatory tariffs on U.S. goods compliant with the USMCA effective September 1. The move affects goods worth approximately C$30 billion ($21.7 billion), including consumer products such as orange juice, wine, clothing, and motorcycles. Tariffs of 25% on U.S. automobiles, steel, and aluminum remain in place for now, as part of Canada’s second round of retaliatory measures covering another C$30 billion in trade. 

The White House responded by calling the move "long overdue" and expressed hope for continued dialogue on trade and national security issues. 

Nvidia Set to Report Q2 FY2026 Earnings 

Market attention is focused on Nvidia’s Q2 FY2026 earnings, scheduled for release after the U.S. market close on August 27. 

Consensus estimates project revenue of $45.8 billion, aligning with the company’s guidance range of $44.1 billion to $45.9 billion. This represents a 52.4% year-over-year increase, though growth has significantly slowed compared to previous quarters. Analysts expect earnings per share of $1.01. Additionally, analysts are closely watching three key areas: structural changes in AI chip demand, production ramp-up of Blackwell chips, and the outlook for the Chinese market. 

Source: Nvidia

Buoyed by its dominant position in AI chips, Nvidia’s stock has surged in recent years, with year-to-date gains exceeding 32%. The company has not only supported the tech sector but also bolstered broader market gains. Last month, Nvidia became the first company globally to reach a market capitalization of $4 trillion. Melius Research analyst Ben Reitzes predicts that Nvidia’s market cap could reach $9 trillion by 2030. 

The substantial growth in Nvidia’s market cap is largely driven by explosive global demand for AI computing power. Its high-end AI chips are highly sought after, generating significant revenue and profits. Optimistic institutional forecasts and investor expectations for future earnings growth have further fueled buying activity, providing strong support for its valuation. 

Nvidia Teases "New Brain" for Humanoid Robots 

On August 22, Nvidia’s official robotics account announced that the number of developers using its robotics stack has surpassed 2 million. Simultaneously, the company teased a "new brain" for humanoid robots, releasing a preview video featuring CEO Jensen Huang signing a card that reads, "To robots, enjoy your new brain!" 

Source: Nvidia

The "new brain" is set to officially launch on August 25, 2025, and is likely based on the open-source visual reasoning model Cosmos Reason, unveiled at the SIGGRAPH conference on August 12. Cosmos Reason is a new open-source, customizable 7-billion-parameter reasoning VLM designed for physical AI and robotics development. It enables robots and visual AI agents to reason like humans, leveraging prior knowledge, physical understanding, and common sense to comprehend and interact with the real world.

Market Recap

Over the past week, the three major U.S. stock indices staged a notable recovery, initially dipping before climbing higher. The Dow Jones Industrial Average rose 1.53% for the week, surging 1.89% on August 22 to close at a record high of 45,631.74. The S&P 500 gained 0.27% over the week and advanced 1.52% to 6,466.91, snapping a five-day losing streak. The Nasdaq Composite, though down for the week, posted a strong daily gain of 1.88%, closing at 21,496.54. 

Source: TradingView

The rally was largely fueled by Fed Chair Jerome Powell’s signal at the Jackson Hole Economic Symposium that a rate cut could be imminent. This significantly boosted market sentiment, with traders increasing bets on a September rate cut and driving a notable improvement in risk appetite. 

Sector-wise, ten of the S&P 500’s 11 sectors closed higher, with consumer discretionary leading the gains at 3.18%. The PHLX Semiconductor Index climbed 2.7%, and the Russell 2000 index surged 4.1% to a new high for the year, reflecting a rush of capital into rate-sensitive small-cap stocks. 

Source: TradingView

Major tech stocks broadly advanced. Tesla jumped 6.22%, marking its largest single-day gain in two months. For the week, the electric vehicle maker also stood out amid sustained optimism about the new energy vehicle sector. 

Source: TradingView

Intel rose over 5% on August 22, driven by news that the U.S. government would take a 10% stake in the company. Intel announced an agreement with the federal government under which the U.S. will invest $8.9 billion in Intel common stock, purchasing 433.3 million shares at $20.47 per share, representing a 9.9% ownership stake. 

The funding comes from $5.7 billion in previously awarded but unpaid subsidies under the CHIPS and Science Act, along with an additional $3.2 billion in government funding. The investment is passive, with the U.S. government receiving no board seat, governance rights, or access to proprietary information. It has also agreed to vote with Intel’s board on matters requiring shareholder approval, with very limited exceptions. 

Source: TradingView

Other major tech names also climbed: Google and Amazon gained over 3%, Meta rose more than 2%, while Apple, Nvidia, and Microsoft posted more modest advances. 

Previously, tech stocks had faced significant pressure amid concerns about an AI bubble. For instance, AI data center firm CoreWeave fell 24% between August 17 and 21, and Palantir dropped over 15% over a five-session losing streak. However, as market sentiment shifted following Powell’s remarks, the trajectory of these stocks has drawn increased attention. 

Source: TradingView