US stocks fell on Wednesday, with the S&P 500 (GSPC) slipping 0.35%, the Dow Jones Industrial Average (DJI) down 0.20%, and the Nasdaq Composite (IXIC) sliding 0.48%. The pullback reversed early gains and came as traders weighed conflicting signals from the Federal Reserve on the pace of interest-rate cuts.
The debate over monetary policy overshadowed stronger-than-expected economic data, including a sharp rebound in new home sales. At the same time, market attention zeroed in on corporate moves from tech giants, with Alibaba (BABA) grabbing headlines after unveiling ambitious AI spending plans.
Market Movers:
- Alibaba (BABA) +8.6%: Shares surged after the Chinese e-commerce titan said it will boost its AI investment beyond its initial $50 billion target. Investors welcomed the move as crucial to keeping pace with global AI spending, which the company’s CEO projected could reach $4 trillion. The announcement also lifted other Chinese chipmakers.
- Tesla (TSLA) +2.6%: Tesla rose as Mizuho Securities raised its price target to $450 from $375, citing resilience to tariffs and optimism for the company’s robotaxi and humanoid robot initiatives. The rally pushed shares toward their highest level of 2025, extending Tesla’s momentum this week.
- Intel (INTC) +4.3%: Intel rose after Treasury Secretary Scott Bessent defended the US government’s 10% stake in the chipmaker, saying Nvidia’s recent $5 billion investment validated the strategy. The partnership highlights Intel’s importance to national security as the only US-based large-scale chip manufacturer.
- Micron (MU) -4.0%: Micron fell despite topping earnings estimates and issuing upbeat guidance. While analysts lifted price targets, some pointed to disappointing HBM (high-bandwidth memory) revenue and warned of market share losses to Samsung. The stock’s slide shows investor caution despite AI tailwinds.
- Marvell Technology (MRVL) +3.1%: Shares climbed after the company authorized a $5 billion stock buyback, signaling confidence in its long-term growth. The chipmaker, a partner with Nvidia in AI infrastructure, emphasized that its strong balance sheet allows it to pursue both expansion and shareholder returns.
- Lithium Americas (LAC) +95.8%: Shares skyrocketed after reports that the Trump administration is considering taking up to a 10% equity stake in the company. The move would renegotiate a $2.26 billion loan for its Thacker Pass project, which is set to become the largest lithium source in the Western Hemisphere.
Fed Division Clouds Outlook
Markets remain on edge as Fed officials signal differing views on interest rates. Chair Jerome Powell said Tuesday the central bank will remain cautious on further cuts, warning that equities appear “fairly highly valued.” His comments contrasted with more dovish signals from other policymakers, deepening uncertainty over how aggressively the Fed will ease policy amid labor market strains.
Investors are bracing for Friday’s release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index. The data could offer critical insight into whether inflation risks justify the Fed’s hesitancy — or whether conditions are ripe for the two rate cuts markets still expect this year.
Housing Market Sparks Optimism
Fresh data showed new home sales jumped more than 20% in August to an annualized rate of 800,000 units, easily topping expectations. Lower mortgage rates helped lure buyers back into the market, suggesting pent-up demand could fuel a rebound in housing activity.
Still, affordability concerns loom large. Homebuilders may be quicker to cut prices and offer incentives than existing homeowners, but sustained relief depends on broader rate declines. For now, the data is a welcome sign of resilience in a key sector that has been under pressure throughout 2025.
Tech Stocks Remain Center Stage
Even as the Nasdaq slipped, individual tech names stayed in the spotlight. Alibaba’s AI spending pledge underscored the sector’s global arms race, while Tesla’s price-target hike reinforced optimism in next-generation technologies. Chipmakers were a mixed bag, with Intel and Marvell gaining on strategic and shareholder-friendly moves, while Micron stumbled on execution risks.
The sector’s uneven performance highlights how investors are carefully parsing winners and losers in the AI-fueled boom. Big announcements are moving stocks sharply in both directions, reflecting both enthusiasm for long-term growth and caution about near-term competition.
Looking Ahead
The week’s key event remains Friday’s PCE inflation report, which could clarify the Fed’s path and recalibrate investor expectations for rate cuts. Meanwhile, earnings from major tech and chip firms will continue to shape sentiment as markets search for leadership in an uncertain policy environment. For now, Wall Street is balancing hopes for AI-driven growth against the reality of a divided Fed and persistent inflation risks.
