Market Update
The main indexes pulled back from record highs on Tuesday as several mega-cap stocks declined. Market participants were also tuned into an early afternoon speech from Fed Chair Jerome Powell, who chimed in on the central bank’s recent rate cut and stock valuations. At the close, the tech-heavy Nasdaq Composite was down 1% at 22,573, the broader S&P 500 was off 0.6% at 6,656, and the blue chip Dow Jones Industrial Average was 0.2% lower at 46,292.
Top Losers
Artificial intelligence (AI) heavyweight Nvidia was one of the worst Dow Jones stocks, shedding 2.8% as investors took profits off the table. Fellow Magnificent 7 stock Amazon.com was at the bottom of the pack with its 3% loss, sparked by news the company is closing all of its U.K. grocery stores.
Fed Chair Powell’s Speech
Federal Reserve Chair Powell chimed in on last week’s rate cut and stock valuations during his speech at the Greater Providence Chamber of Commerce in Rhode Island – his first appearance since the September Fed meeting. Powell reiterated that the Fed faces a "challenging situation," given near-term risks to inflation "are tilted to the upside," while "risks to employment are to the downside." He noted that even with last week’s rate cut, the federal funds rate is "still modestly restrictive," but leaves the central bank "well positioned to respond to potential economic developments."
Stock Valuations
Powell said that committee members "do look at overall financial conditions, and we ask ourselves whether our policies are affecting financial conditions in a way that is what we’re trying to achieve." However, he added that "by many measures … equity prices are fairly highly valued," but this is "not a time of elevated financial stability risks."
Analyst Upgrades
Looking elsewhere on Wall Street, Palantir Technologies rose 1.8% after BofA Securities analyst Mariana Perez Mora reiterated her Buy rating on the tech stock and raised her price target to $215 from $180 – representing implied upside of nearly 20% to current levels. The analyst writes in a note to clients that "Palantir is leveraging on Agentic AI to extend the FDE capabilities to more use cases," and that "the AI FDEs will accelerate growth."
Earnings Report
AutoZone edged down 0.02% even after the auto parts retailer posted lower-than-expected fiscal fourth-quarter earnings and revenue. The company cited higher costs related to tariffs as one headwind – and it expects this trend to continue in its new fiscal year. Despite the disappointing earnings results, Wall Street continues to believe AutoZone is a top-notch stock, with 18 analysts covering the consumer discretionary stock saying it’s a Strong Buy, four having it at Buy, three rating it at Hold, and one saying it’s a Strong Sell.
Conclusion
The main indexes remain near record highs and are poised to close the historically tough month of September with notable gains. With the Fed’s recent rate cut and the ongoing debate over stock valuations, investors will be closely watching the market’s next moves. As always, it’s essential to stay informed and up-to-date on the latest market news and trends to make informed investment decisions.
