Dow Jones, Nasdaq, S&P 500 weekly preview: Investors turn focus to Jackson Hole

Investing.com -- U.S. stocks eased on Friday after the S&P 500 briefly touched a record, as investors locked in profits following a strong run.

The benchmark index slipped 0.29% to 6,449.80, while the NASDAQ Composite lost 0.40% to finish at 21,622.98.

The Dow Jones Industrial Average managed a gain of 34.86 points, or 0.08%, closing at 44,946.12. Even so, the blue-chip gauge ended the session below the intraday high set earlier.

Selling in chipmakers and a weaker consumer sentiment reading weighed on the market, though all three benchmarks posted weekly advances.

The Dow led with a 1.74% rise, while the S&P 500 added 0.94% and the Nasdaq climbed 0.81%, helped by inflation figures that bolstered expectations for a Federal Reserve rate cut next month.

Investors will turn their focus this week to Jackson Hole, Wyoming, where Federal Reserve officials convene for the annual policy symposium, seeking signals on the pace of rate cuts that have helped drive stocks to record highs.

The Fed will also publish its July FOMC minutes on Wednesday.

The Jackson Hole meeting comes after mixed economic data, with consumer and wholesale prices painting a conflicting picture of the impact of President Donald Trump’s tariffs.

The event will conclude on Friday with remarks from Fed Chair Jerome Powell.

“Chair Powell’s speech on Friday will be in focus, as investors’ expectations for rate cuts have risen since the underwhelming jobs report earlier this month,” Deutsche Bank analysts said in a note.

While recent reports show resilient consumer spending and a still-functioning labor market, some fear Powell could temper expectations for near-term easing by pointing to persistent inflation pressures.

Futures markets continue to price in at least two additional quarter-point cuts this year, beginning at the Fed’s September meeting.

S&P 500 earnings up 11% in Q2; Walmart, Baidu to report this week 

S&P 500 earnings rose 11% in the second quarter of 2025, well above the consensus 4% forecast, as companies benefited from lowered expectations earlier in the year. According to Goldman Sachs, about 60% of firms beat EPS estimates by more than a standard deviation.

The season saw a sharp pickup in guidance upgrades, with 58% of companies raising full-year outlooks, double the first quarter’s share. Analysts also lifted estimates for the second half of 2025 and 2026, though EPS growth is expected to slow to 7% in the back half of the year.

Moreover, profit margins have held up better than feared under tariffs.

Mega-cap tech continued to dominate, with the Magnificent 7 delivering 26% EPS growth, beating estimates by 12%, Goldman Sachs said. The 2026 EPS projections for the group are up 1% year-to-date, compared with a 4% cut for the rest of the index.

Investors await several high-profile results this week, with Palo Alto Networks (NASDAQ:PANW), Home Depot (NYSE:HD), Baidu (NASDAQ:BIDU), and Walmart (NYSE:WMT) all set to report in the coming days, among several other companies. 

What analysts are saying about U.S. stocks

Evercore ISI: "Powell on 8/22 is likely to indirectly signal a 25bp rate cut on 9/17/25 – stressing 50bp is not an option absent Labor market deterioration, and Oct and/or Dec cuts will be “data dependent”. For a market that was eager to embrace “50 in Sept”, a balanced view could catalyze a near term -7% to -15% pullback into October, within the context of the Structural AI Driven Bull Market."

JPMorgan: "After a prolonged poor performance, culminating in last year’s 1H weakness, which ensured small caps were the wrong trade for 2024 as a whole, the group is showing some life in certain places this year. We think selected small cap markets do offer a better risk-reward this year."

"Regionally, while we entered the year arguing that small caps are not as attractive in the U.S., most recently they have started to trade better; potential supports down the line could be the more aggressive Fed easing, as well as the positive impact of the recent tax bill, certain provisions could offer a meaningful cashflow support to smaller companies."

Barclays: "Q2 off-cycle earnings will be another test to see if software can find support. Our checks show solid end demand and valuation levels are much lower, but is this enough to overcome the AI uncertainties? Maybe, not for the long run, but we expect a positive bounce in the short-term nonetheless."