Dow rises 80 pts as investors await Warsh speech, chip stocks retreat

• Money markets priced in a 36% chance of a September rate hike, while Fed funds futures indicated 64% probability of rates remaining unchanged at the next meeting
• Marvell Technology dropped 7.17% after investors expressed concerns about timing of AI chip revenue from its Alphabet Google deal and current-quarter gross margin guidance disappointed
• Gap stock jumped on leadership change with Michael Francis becoming Old Navy CEO, while PayPal and Ulta Beauty declined on company-specific concerns

Market Summary

Market Performance:

The Dow Jones Industrial Average rose 85 points on Friday, while the S&P 500 gained 0.09% and the Nasdaq Composite remained nearly flat, declining 0.01%. All three major indexes were positioned for weekly gains following Thursday's rally.

Key Focus:

Markets centered on Federal Reserve Chair Kevin Warsh's inaugural Jackson Hole speech, with investors seeking clarity on monetary policy direction. Money markets priced in a 36% probability of a September rate hike, while Fed funds futures indicated a 64% chance rates would remain unchanged. Mixed inflation data has created uncertainty around the Fed's policy trajectory.

Semiconductor Sector Retreat:

Chip stocks pulled back after Thursday's AI-driven rally. Marvell Technology (MRVL) plummeted 7.17% despite raising its 2027 revenue forecast, as current-quarter non-GAAP gross margin guidance disappointed investors. Concerns emerged about revenue timing from Marvell's AI chip agreement with Alphabet's Google. Other semiconductor stocks, including Nvidia and Micron, also retreated after recent strong performance.

Individual Stock Movements:

• Gap (GPS): Shares jumped following the appointment of Michael Francis as Old Navy CEO, aimed at improving the struggling brand's performance
• PayPal: Stock declined on unspecified concerns
• Ulta Beauty: Fell 3.1% after reporting weakened comparable-sales growth in Q2

Global Markets:

Asian markets closed mixed, with Japan's Nikkei 225 up 0.41%, while South Korea's Kospi and China's CSI 300 declined.

Additional Data:

Investors awaited the University of Michigan consumer sentiment reading for August and commentary from Chicago Fed President Austan Goolsbee.