Tech and retail put Wall Street under pressure as investors turn to Jackson Hole for Fed clues

AI enthusiasm has been the primary driver of gains in the market recently, but US equities appear to be entering bubble territory, according to some experts, leaving leading US indexes limp.

The S&P 500 extended its losing streak to five days on 21 August, pressured by a fall in retail and tech stocks and concerns about the trajectory of interest rates, a day ahead of remarks from Federal Reserve chairman Jerome Powell.

Hawkish signals from the minutes of the Federal Reserve’s July meeting have weighed on sentiment over the past week with a bulk of Fed members largely supporting the central bank’s wait-and-see approach to cutting interest rates, amid caution over the inflationary impact of president Trump’s trade tariffs.

The central bank was also seen prioritising inflation risks over fears of a decline in the US labour market, which could elicit another hold in September, counter to what the market had been anticipating. Fed Chair Jerome Powell is set to speak at the Jackson Hole Symposium on 22 August, possibly offering more clues on policy.

Among the big stock movers, tech led the way ahead of Nvidia’s earnings next week, due after the market close on Wednesday 27 August. These will be more crucial to the market mood than ever after a spell of outsized tech stock selling.

Tech shares were hit chiefly by growing doubts over the profitability of AI, especially following a highly critical report released from a branch of the Massachusetts Institute of Technology, which claimed that 95% of organisations were seeing ‘zero return’ on their AI investments.

Nvidia stock has lost around 3.5% over the past week, although its market cap still tops $4.25 trillion. Other mega cap tech stocks including Apple and Microsoft have also endured a weak week in the red, although not as bad as AI luvvies like Palantir Technologies and Super Micro Computer.

Big box retail giant Walmart also fell sharply, while Target tumbled after the company named insider Michael Fiddelke as CEO and retained annual forecasts that were lowered in May. More on both in a bit. Coty also slumped after the beauty retailer forecast a weak first half of fiscal year of 2026, with declines likely in both sales and profit.

Walmart

Although the world’s biggest retailer hiked its full-year sales and earnings outlook in the face of rising tariffs with the consumer remaining resilient its shares fell.

Comparable sales for Walmart US excluding fuel grew 4.6% in the second quarter amid strength in the grocery and health and wellness categories, and the Bentonville-based behemoth reported another quarter of double-digit gains for its online business.

Walmart also upgraded this year’s sales growth guidance to the 3.75% to 4.75% range, up from its previous expectations for 3% to 4% growth, and nudged its earnings per share outlook up to the $2.52 to $2.62 range, from $2.50 to $2.60 previously.

Target

A second-quarter update 20 August from Walmart’s smaller rival Target was met with disappointment. Shares in the Minneapolis-based discounter slid 4.5% to $97.06 after it named insider Michael Fiddelke as the replacement for current CEO Brian Cornell.

Investors often prefer an outsider to bring fresh ideas when a company is stuck in a rut, and while second-quarter results beat Wall Street estimates, Target stuck with full-year guidance for another drop in sales.

TJX Companies

Elsewhere, shares in off-price apparel purveyor TJX Companies hit all-time highs after second-quarter 20 August revenue and earnings beat Wall Street expectations and the retailer raised its full-year 2026 guidance in the face of tariff pressures.

Home Depot

Home Depot’s shares were flat on the week after the DIY products purveyor’s second-quarter results 19 August missed on key metrics, although same-store sales growth picked up through the quarter with lower interest rates injecting life into the US housing market.

Home Depot’s suitably-monikered CEO Ted Decker said ‘the momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects. Our teams are executing at a high level and we continue to grow market share.’

Viking Therapeutics

Biotechnology company Viking Therapeutics plunged more than 40% on 19 August after announcing disappointing results for its oral obesity pill in a mid-stage trial.

While patients taking the experimental treatment lost an average 12.2% of their bodyweight after 13-weeks compared with 1.3% for those on the placebo, the number of discontinuations was 28%, raising concerns around the side effects which ranged from mild nausea to vomiting.

Analyst Jared Holz at Mizuho said the result ‘probably shutters hope for Viking being a bigtime player in the oral obesity market over the near to medium term.’

Shares in rivals Eli Lilly and Novo Nordisk gained more than 2% as investors concluded the race to develop an oral obesity drug had potentially become less competitive.

Viking’s trial results follow hot on the heels of Eli Lilly’s own clinical trial readout 7 Aug for its oral obesity treatment orforglipron which fell also short of expectations, sending its shares 14% lower on the day.