US equity markets lock in weekly gains as focus shifts to Jackson Hole and Fed Policy clues

Nvidia and UnitedHealth drive shifts in US market dynamics

The US Tech 100 (Nasdaq 100) and the US 500 (S&P 500) finished lower on Friday, while the blue-chip Dow Jones reached a record high - about eight weeks after the Nasdaq and S&P 500 achieved their own milestones. The rally in the Dow was supported by gains in UnitedHealth Group, following Berkshire Hathaway's disclosure of a major stake. For the week, the Dow gained 770 points, or 1.74%. The S&P 500 rose 0.94% to 6,449, while the Nasdaq 100 added just 0.43%.

Investors are rotating out of the technology sector, prompted by high valuations, softer earnings for Advanced Micro Devices (AMD), and recent government export taxes on Nvidia and AMD. The Dow and the Russell 2000 are seen as better positioned to benefit from a robust economy, reduced trade uncertainty, and the outlook for easier monetary policy, explaining their outperformance last week.

Retail sales and consumer sentiment

Economic data released on Friday was generally positive. July retail sales data was strong, with the retail control group, which contributes to gross domestic product (GDP), rising 0.5% month-on-month (MoM) versus the 0.4% expected. June's data was also revised upwards from 0.5% to 0.8%.

However, this was offset by a softer-than-expected University of Michigan consumer sentiment index, which fell to 58.6 in August from 61.7 prior, well below the expected 62. Concerns around stagflation arose as one-year-ahead inflation expectations surged to 4.9% from 4.5%, and long-term expectations increased to 3.9% from 3.4%. The pricing of a September Federal Reserve (Fed) rate cut fell to around 84%, down from 105% after last Tuesday’s inline consumer price index (CPI) print.

Zooming out, large and unprecedented shifts in US trade and immigration policy are expected to weigh on US GDP. Despite this, a healthy underlying cyclical backdrop, combined with additional fiscal and monetary easing, is expected to support growth.

Looking ahead 

• Jackson Hole Symposium

Chair Powell’s comments at this week’s Jackson Hole Symposium will be closely scrutinised. While we think the Fed will deliver an insurance-style 25 basis point (bp) rate cut in September, Fed Chair Powell will likely remain non-committal and data-dependent, especially with one more payroll and CPI report due before the Federal Open Market Committee (FOMC) meeting on Wednesday, 17 September.

• Earnings season highlights

The second quarter (Q2) of 2025 earnings season continues this week, with reports scheduled from major retailers Home Depot, Target, and Walmart, before Nvidia’s earnings report on 28 August, which will conclude this earnings season.

Nasdaq 100 technical analysis

Since the Nasdaq 100’s surge higher on 12 May, we have been working with the view that the rally from the low on 21 April of 17,592 is a Wave III (Elliott Wave Theory). Once the Wave III is complete, it should be followed by a Wave IV correction.

As shown on the weekly chart below, upward-sloping weekly trend channel resistance stalled the Nasdaq’s advance last week. Zooming in on the daily chart, there are clear signs of bearish relative strength index (RSI) divergence.

While we aren’t interested in pre-empting a top, we are watching carefully for signs of upside rejection from this weekly trend channel resistance, which could signal a deeper pullback.

Specifically, a break below support at 23,500 - 23,400 would indicate a deeper pullback is underway, initially towards the recent 22,673 low with scope back to previous record highs at the 22,200 - 22,000 area. Until then, allow for the uptrend to extend in the weeks ahead.

Nasdaq 100 daily chart

S&P 500 technical analysis

We have been working with the view that the rally from the 21 April low of 5101 was a Wave III that should be followed by a Wave IV pullback.

With the Nasdaq 100 again testing significant trend channel resistance shown on the chart above, we are open-minded about whether this resistance zone will provide the platform for a retracement or a break higher.

Returning to the S&P 500, there are clear signs of bearish divergence, which suggests the rally is losing momentum. A sustained break of short-term support at 6400 - 6380 would greatly increase the chances that a Wave III is complete at the recent 6481 high and that a Wave IV pullback is underway.

The initial target for the Wave IV pullback is a band of support at 6220 - 6200, where the S&P 500 has bounced from on three occasions over the past seven weeks. A sustained break of this support level would then open the way for a deeper Wave IV decline towards support at 6150 - 6130 coming from a trio of highs between December and February.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 18 August 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}