TheDrop Market Analysis, 08/21/25

Markets sank after key signs from the Federal Reserve showed reduced probability of a September rate cut as perceived by many investors.

Chair of the Federal Reserve Jerome Powell.

The S&P 500 composite fell 0.4%, the Dow 30 composite fell 0.34%, the Nasdaq composite fell 0.34%, and small businesses showed strength with the Russell 2000 composite rising by a modest 0.21%. The VIX volatility index rose 6.38%, reflecting the volatile nature of stocks over the course of the day.

Global ETFs saw mixed results, with the Nikkei 225 falling 0.65% and the FTSE 100 rising 0.23%.

Cryptocurrencies saw another bad day as Bitcoin fell 1.77% and XRP fell 3.67%, accompanied by the general stock recession today.

Investors retreated after today's Fed chair Powell speech, showcasing shifting priorities from a strong labor market to reducing inflation, preventing a September rate cut from happening. Combined with the Cleveland Federal Reserve Bank's own Hammack's dismissal of a September rate cut, investors saw little probability in it. Previously, they were almost certain of one happening.

Walmart released its earnings report today, showing very minimal growth compared to expectations as tariff-related price pressures begin to ripple in.

The biggest Magnificent Seven stocks like Nvidia saw marginal declines as some analysts warn of their deteriorating dominance over artificial intelligence, offering alternatives like Alphabet Inc.