NVIDIA Growth Slows, Tech Sells Off

Market Recap: 25-29 August 2025

Financial Markets

US Stock Market

This week the main US stock market indices (close to all-time highs) were barely changed – the S&P500 and the NASDAQ 100 lost 0.1% and 0.4%, respectively. The small cap index (Russel 2000) climbed 0.2%. Trading volumes were average in general, but the tech sector selloff was heavy on Friday.

COMMODITIES

Precious metals continue holding their levels. Gold and silver gained 2.2% and 2.1%, respectively. Gold is still close to the previous all-time high and has been in the range 3100-3500$. Silver continues strong and is reaching the 40$ level, which should act as short term resistance. Silver should trade in the 34-42$/oz range in the short to medium term.

WTI crude oil rose slightly and closed the week at 64$/bbl. In the short term, the trading range should be 60-67$ and in the medium term 55-77$/bbl

Bitcoin fell ~4% and is currently trading around 109k$ – it seems Bitcoin is starting to show signs of weakness at the same time as the tech sector. 100k$ and 93k$ should act as short term supports for the cryptocurrency.

US DOLLAR, MONEY SUPPLY

The relative strength of the US dollar (DXY) was essentially unchanged, at ~97.9. The EUR/USD is around 1.169$, the GBP/USD is at 1.350$, and the USD/JPY is at 147.04 JPY.

US M2 money supply at the date of 28th July 2025 was up by 0.43%, showing a continuous increase in the money supply since December 2023. Banks didn’t stop lending so far – if the money supply was going down, it would be a warning sign for the economy and equities.

The national financial conditions index (NFCI) released on 18th August 2025 loosened by 0.73%. Note that this indicator is delayed by two weeks. Positive numbers in the NFCI mean tighter financial conditions, while negative numbers indicate looser financial conditions.

BONDS AND OPTIONS

US bond yields fell slightly this week. Yields now sit at 3.621% for the 2-year and 4.232% for the 10-year. The yield curve has uninverted since a year ago, and lower yields are expected in the next few years, likely as a consequence of low growth, low inflation, and short-term interest rate cuts. Long-term growth and inflation expectations remain at ~4.9%.

The VIX rose this week, but still remains at a comparatively low level of ~15.3, showing investor complacency. The overall market remains quite expensive and the risks of a recession are mounting. Options premiums are not very attractive at this moment – option sellers need to be patient and particularly selective regarding which contracts to sell.

Comment Section

The US equity market, as measured by the market cap-weighted indices (S&P500 and NASDAQ) is very close to an all-time high. NVIDIA reported earnings in line with expectations, but the year-over-year growth has slowed. As the bellwether for the larger AI ecosystem, Nvidia’s slowdown could fuel concerns about a possible correction in the market. Earlier this month, OpenAI CEO Sam Altman warned of an “AI bubble,” and MIT researchers found most companies aren’t actually making any money from implementing AI. So the question is: how much of a bubble are we in, and how wide is the correction going to be, if all the hype is not accompanied by earnings growth (in different sectors) due to AI?

Next week (a shortened US week), August jobs data will unveil whether the labor market holds the sharp slowdown evidenced in the previous releases. Nonfarm payrolls, the unemployment rate, JOLTS, etc, will bring fresh insights which may alter the decision of the Federal Reserve regarding interest rate cuts.

Have a nice weekend, and good luck!!!