S&P 500, Nasdaq end down on tech stocks, investors weigh Iran moves

KUALA LUMPUR, 25 AUGUST 2026 —

US Stocks Slip as Tech Shares Weigh on Markets; Iran Sanctions Loom

The S&P 500 fell 21.51 points, or 0.28%, to 7,652.86, while the Nasdaq Composite dropped 200.26 points, or 0.76%, to 25,980.19. The Dow Jones Industrial Average bucked the trend, rising 140.15 points, or 0.26%, to 53,417.16, supported by gains in financial heavyweights JPMorgan Chase (+1.4%) and Visa (+3%).

Technology stocks led declines, with the Philadelphia SE Semiconductor index falling as chipmakers Nvidia (-2.9%), Micron Technology (-5.8%), and Broadcom (-2.6%) weighed on the S&P 500 Information Technology sector. The pullback reflected broader concerns over stretched valuations in AI-related equities ahead of Nvidia’s quarterly earnings report, a key market catalyst expected later this week.

Political Headwinds for Tech and AI Sentiment in the tech sector was further dampened by escalating political opposition to artificial intelligence data centres in the United States. Texas Governor Greg Abbott issued one of the strongest warnings yet from a Republican official, stating that data centre companies “dug their own grave” by failing to secure community support amid rising electricity demand concerns.

Abbott’s administration imposed a temporary pause on new data centre project approvals through the state’s grid interconnection process, citing risks to power grid reliability. “The bigger worry we have is the hawkish rhetoric we’re starting to hear from politicians on AI and data centres,” said Ohsung Kwon, chief equity strategist at Wells Fargo. “We’ve been highlighting that as a big risk heading into the midterms.”

US-Iran Tensions and Market Jitters Investors also grappled with geopolitical developments after the Trump administration signalled a potential expansion of sanctions on countries doing business with Iran, describing the move as part of an “economic D-Day.” No penalties were imposed immediately, but the announcement added to market uncertainty as traders weighed the implications for global oil prices and supply chains.

The 30-year US Treasury yield, which had earlier surged to a 19-year high amid concerns over ballooning government debt, remained above the 5% threshold despite reports that US Treasury Secretary Scott Bessent could utilise the department’s near-US$1 trillion General Account to fund bond buybacks. The yield’s elevated level underscored ongoing concerns about fiscal sustainability and its potential impact on borrowing costs.

Federal Reserve and Inflation Watch All eyes are now on Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium on Friday, where investors will seek clarity on policymakers’ assessment of the Treasury’s rescue efforts and the broader economic outlook. The timing is critical, as markets also brace for the release of the Personal Consumption Expenditures (PCE) report on Wednesday—the Fed’s preferred inflation gauge.

Recent benign consumer inflation data had reduced expectations of an immediate interest rate hike, with traders now pricing in just one 25-basis-point increase by the end of 2026, according to LSEG data. The PCE report will be closely scrutinised for signs of persistent inflationary pressures or cooling trends that could influence the Fed’s policy trajectory.

Trade Policy Shifts and Sectoral Impact In a separate development, US President Donald Trump announced plans to raise tariffs on cars, trucks, and automotive parts from Canada to 50% starting January 1, following the collapse of trade talks over the weekend. The move sent shares of major automakers lower, with Ford declining 3.3% and General Motors falling 1.1%. Trucking company JB Hunt Transport also dropped approximately 5.7%.

The broader market saw declining issues outnumber advancers by a 1.08-to-1 ratio on the New York Stock Exchange (NYSE), with 158 new highs and 116 new lows recorded. On the Nasdaq, declining issues outnumbered advancers by a 1.5-to-1 ratio, with 1,955 stocks rising and 2,934 falling. The S&P 500 logged 17 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 87 new highs and 98 new lows.

Trading volume on US exchanges totalled 14.36 billion shares, below the 20-day average of 16.5 billion.

Regional and Malaysian Market Implications For Malaysian investors, the pullback in US tech stocks—particularly in semiconductor and AI-related firms—could have indirect implications, given the country’s exposure to global technology supply chains. Malaysian equities, which have benefited from strong semiconductor-related manufacturing activity, may face spillover effects if US tech weakness persists.

Analysts suggest that while Malaysia’s domestic demand remains resilient, external headwinds from US-China trade dynamics and global monetary policy shifts could weigh on investor sentiment. “The key risk for regional markets is the interplay between US policy uncertainty and its impact on global liquidity conditions,” said a Kuala Lumpur-based portfolio manager, who requested anonymity.

Stakeholder Perspectives and Forward Outlook Market participants remain divided on the near-term trajectory. Richard Reyle, chief investment officer at Questar Capital Partners, emphasised the dual importance of Nvidia’s earnings and Warsh’s Jackson Hole remarks. “Nvidia needs to impress in order to keep one leg of the stock market stable, and Warsh needs to provide clarity on interest rates in order to keep the other leg stable,” he said.

Meanwhile, concerns over US fiscal policy and geopolitical tensions continue to cast a shadow over investor confidence. The looming PCE report and potential escalation in US-Iran sanctions could introduce further volatility, particularly in energy-sensitive sectors.

As the week progresses, all eyes will be on whether the Fed’s rhetoric at Jackson Hole can reassure markets or if rising political and economic uncertainties will keep pressure on risk assets. For now, the cautious tone in US equities reflects a market in wait-and-see mode, navigating a complex interplay of corporate earnings, monetary policy, and geopolitical risks.

Related: Nvidia · Federal Reserve · Kuala Lumpur