The S&P 500 (SPY) and Nvidia (NVDA) are under pressure as the Federal Reserve’s latest minutes spark uncertainty around interest rate cuts. Tech stocks are leading a market sell-off, fueled by concerns over AI profitability, stretched valuations, and regulatory risks. With SPY trading at $638.77 and Nvidia near $174.76, investors are bracing for volatility ahead of Jerome Powell’s Jackson Hole speech.
The SPDR S&P 500 ETF Trust (SPY), which tracks the broader market, is currently trading around $638.77 after hitting an intraday high of $639.55 and a low of $632.98. Nvidia (NVDA), one of the most closely watched stocks in the tech sector, is hovering near $174.76 after reaching as high as $176.59 and dipping as low as $168.90. These movements highlight the tension in today’s markets, where tech stocks in particular are feeling the brunt of selling pressure fueled by doubts over valuations, regulatory risk, and concerns about what the Federal Reserve will do next.
The Federal Reserve remains at the center of market anxiety. Minutes from the July meeting revealed that disinflation has stalled and tariff pressures are increasing, even though two Fed members advocated for cutting rates. Optimism that the Fed would begin rate cuts in September has weakened, with the probability of a move downshifting from about 65% to just under 50%. Political and external pressures, however, are adding new layers to the debate. Treasury Secretary Scott Bessent has publicly called for a half-point rate cut, while Senator Ted Cruz has suggested eliminating interest payments on bank reserves, a radical shift that could fundamentally alter monetary policy if adopted. The Fed now finds itself walking a fine line between persistent inflation, political scrutiny, and fragile investor expectations.
The sell-off in technology stocks can be traced to several converging factors. Valuations in the sector have reached extreme levels, especially among companies tied to artificial intelligence (AI). The S&P 500 as a whole is at its most expensive ever when measured by price-to-sales ratio at 3.19, compared with a long-term average of 1.88. Tech stocks stand out even more, with a ratio of 9.76, which is nearly 90% above the 10-year average. Nvidia, Microsoft, and Apple are the main drivers of that stretched pricing. At the same time, doubts about the profitability of AI are intensifying. A recent MIT study showed that 95% of organizations adopting generative AI are not yet seeing any measurable return on investment, which has shaken confidence in AI-linked companies like Nvidia.
Regulatory risk is also clouding the picture. Reports that the U.S. government might take equity stakes in semiconductor firms such as Intel, Nvidia, and AMD in exchange for CHIPS Act funding have raised investor concerns about government intervention in corporate strategy. Combined with high valuations and profit-taking after months of strong rallies, these developments have triggered a broad pullback across the Nasdaq and S&P 500, with investors rotating capital into more defensive areas such as healthcare, gold, and consumer staples.
For SPY, the tech weakness has translated into modest declines, with the ETF down between 0.4% and 0.6% today. Because of its heavy weighting toward large technology names, SPY remains highly sensitive to shifts in sentiment around big tech and the Federal Reserve. Nvidia, as one of the market’s AI leaders, has been particularly vulnerable. Its dip today reflects both profit-taking and a recalibration of growth expectations.
The broader picture is one of volatility. Investors are bracing for Fed Chair Jerome Powell’s Jackson Hole speech, which could provide more clarity on the path of monetary policy. In the meantime, the combination of stretched valuations, policy uncertainty, and skepticism about AI profitability is creating a turbulent environment for both SPY and Nvidia. Near-term swings seem inevitable, while the longer-term direction will likely depend on how convincingly the Fed manages to balance inflation control with market stability, and whether tech earnings can justify their lofty valuations.