Stocks lose altitude after the open as tech stumbles and trade frictions cloud the outlook

Stocks slipped in the first minutes of Friday’s session, an orderly pullback that followed a run to fresh highs and an inflation update that hit the bull’s-eye without settling any debates. July’s PCE report came in roughly as expected—headline running near 2.6% year over year—keeping a September rate cut in play while reminding investors that services inflation is proving sticky. That combination favored a cautious stance: take some risk off, especially in crowded winners, and wait for the next data points to validate the “cut soon, ease slowly” narrative.
Tech told the story. Dell sank after its outlook fell short of sky-high hopes tied to AI-server demand, and Marvell fell on signs that its data-center ramp will be choppier than the market assumed. Nvidia also eased as traders weighed China-related sensitivities that could blur an otherwise powerful growth trajectory. Those micro disappointments didn’t break the AI thesis; they did challenge the notion of a straight-line earnings ramp. Elsewhere, Autodesk popped on stronger guidance, and small caps managed a fractional gain, illustrating how leadership can broaden when mega-caps take a breather.
Macro cross-currents kept a lid on enthusiasm. The end of duty-free treatment for many small-value imports sharpened focus on tariff pass-through at the very moment the Fed is trying to land inflation back at 2%. Even if rate policy turns more accommodative next month, higher trade frictions risk nudging certain goods prices higher, complicating the disinflation glide path. A separate legal proceeding involving a sitting Fed governor added institutional-risk headlines to the tape, a reminder that politics can intrude on market psychology even on data-heavy days.
With two of the three major indexes at record levels as of Thursday’s close, positioning was extended enough that a “just fine” inflation print was never likely to unleash a rally. Early trading reflected that reality: a mild drift lower in the headline indices, rolling sector rotations beneath the surface, and a bias toward cash-flow stability over pure operating leverage. Month-end mechanics were also in play, as managers balanced performance preservation with the need to align exposures going into September’s macro calendar.
Traders now pivot to the next checks: a regional manufacturing snapshot and a final read on August consumer sentiment. Neither will make or break the Fed’s September call, but together they can affirm whether the economy is slowing in an orderly way or losing altitude faster than expected. If the data cooperate, the path of least resistance remains a soft-landing scenario with a measured policy pivot. If they don’t, the early-session wobble could broaden. Either way, the first hour’s verdict was pragmatic rather than dramatic—after a month of momentum, the bar for additional upside has risen, and the market is acting like it knows it.