Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole

Investing.com -- U.S. stocks closed mostly lower Tuesday ahead of the upcoming Jackson Hole Symposium later this week, with tech stocks feeling the brunt of the pain. Investors are paying close attention to the recent stock rotation, with money moving out of tech after significant year-to-date gains on the AI boom. Market darling NVIDIA Corporation (NASDAQ:NVDA) fell 3.5% today ahead of its much-anticipated earnings next week (08/27).

The Dow Jones Industrial Average eked out a small 10 point gain, while the S&P 500 index slipped 37 points, or 0.6%, and the NASDAQ Composite fell 315 points, or 1.5%.

Earlier in the session, the Dow briefly hit a new all-time high before reversing lower.

Stock rotation breeds worry

Recently, there has been a theme of investors rotating into small-caps versus large caps, value stocks over growth, and cyclicals over defensive. While it is not unusual to see this phenomenon in the market, Capital Economics’ James Reilly points out that it was rather unusual last week, given that the overall market rose. It was only the second time this happened in 2025.

Commenting on why investors are paying attention to the rotation, Reilly said it is because that is what was seen toward the end of the dotcom bubble. "Back then, a similar rotation from large to small cap - but a rise in the overall stock market - occurred toward the later stages of the bubble."  Earlier this week, OpenAI’s Sam Altman warned of an AI bubble.

Jackson Hole looms large 

Investors are eagerly awaiting the start of the Federal Reserve’s Jackson Hole symposium later in the week, looking for clues from Chair Jerome Powell as to what will happen at the central bank’s remaining policy meetings this year. The theme of this year’s event is: "Labor market in transition: Demographics, productivity, and macroeconomic policy".

Markets are indicating an 83% chance for a quarter-point rate cut at the Fed’s next policy meeting in September.

Economists widely expect Powell to sound a little more "dovish" than he has been, although he still may not explicitly signal an imminent rate cut.

On jobs, Deutsche Bank (ETR:DBKGn)’s Chief U.S. Economist, Matthew Luzzetti, said, [w]e expect his comments to be somewhat more balanced, while still prioritizing measures of slack, which could create uncertainty about September cut prospects, at least relative to current elevated pricing." Meanwhile, on the other side of the Fed’s mandate, inflation, Luzzetti expects Powell to "maintain his hawkishleaning narrative."

"Taken together, data dependence and a focus on the distribution of risks could be a key message from the Chair," Luzzetti added. "Powell is likely to signal greater openness to cutting rates in the near term but not lock in September."

Data released earlier Tuesday showed that the number of new U.S. single-family homes and permits for future construction rose in July even as high mortgage rates and economic uncertainty continued to hamper home purchases.

Single-family housing starts, which accounts for the bulk of homebuilding, increased 2.8% last month, while permits for future single-family homebuilding edged up 0.5%.

Investors digest Zelensky meeting 

Elsewhere, investors will be looking at the repercussions of the meeting between Ukrainian President Volodymyr Zelensky, several European heads of state, and U.S. President Donald Trump at the Oval Office.

Trump flagged a productive meeting and said that he will now attempt to arrange a meeting between Zelensky and Putin, which could open the door for trilateral talks over a comprehensive peace deal. 

Trump also said that the U.S. would help guarantee Ukraine’s security, but did not specify the terms of any guarantees.

These guarantees are likely to be worked out within 10 days, Zelensky said on Tuesday.

"Security guarantees will probably be ’unpacked’ by our partners, and more and more details will emerge. All of this will somehow be formalised on paper within the next week to 10 days," Zelensky said at broadcast press briefing after his meetings.

Still, a peace deal appears far from imminent, especially given that Putin has shown little indication of agreeing to a ceasefire. 

The most significant sticking point is the land that Russia has occupied in fighting, which Ukraine wants back. The Russian leader reportedly wants Ukraine to hand over the remainder of the Donbas region to Moscow to end the war, something Zelensky will be very reluctant to do.

Home Depot earnings in spotlight, Intel gains on Softbank deak

On the earnings front, investors will be keeping tabs on reports from a host of big-box retailers and home improvement chains, starting with results from Home Depot (NYSE:HD). 

The world’s largest home-improvement retailer said comparable sales grew 1% in the fiscal second quarter, but also indicated that consumers were staying away from big purchases. Shares rose 3%.

Elsewhere, Intel (NASDAQ:INTC) stock rose 7% after the Japanese tech conglomerate Softbank (OTC:SFTBY) agreed to buy $2 billion worth of stock in the beleaguered chipmaker with the goal of building advanced chipmaking facilities in the United States.

Palo Alto Networks (NASDAQ:PANW) stock surged after the cybersecurity company forecast fiscal 2026 revenue and profit above estimates, betting on growing demand for its artificial intelligence-powered solutions.

Results from Lowe’s Companies (NYSE:LOW), Walmart (NYSE:WMT), and Target (NYSE:TGT) are also on the deck for later this week.

The figures could present a fresh take on the state of the American consumer heading into the second half of the calendar year.

Other major earnings prints due this week include those from Chinese tech major Baidu (NASDAQ:BIDU), Workday (NASDAQ:WDAY), and Analog Devices (NASDAQ:ADI). 

Crude slips after Ukraine talks 

Oil prices fell on Tuesday as traders assessed the potential for three-way talks to end the war in Ukraine, which would likely lead to the lifting of sanctions on Russian crude.

At 3:46 PM ET, Brent futures slipped 1% to $65.92 a barrel, and U.S. West Texas Intermediate crude futures fell 1.2% to $61.92 a barrel.

Both contracts rose nearly 1% on Monday after U.S. Trade Adviser Peter Navarro criticized India’s purchases of discounted Russian crude as funding the war, renewing supply flow worries.

Following talks between Trump and Zelensky in Washington, the U.S. president floated the possibility of a subsequent three-way discussion, including Russia’s Vladimir Putin, keeping alive hopes for a pathway to negotiations. 

Ambar Warrick and Peter Nurse contributed to this article