Markets enter a critical week following Friday's tech sector volatility that saw AI-related stocks retreat despite the S&P 500 ($SPX) (SPY) achieving new highs through Thursday. The selloff was triggered by concerns over China's semiconductor ambitions, particularly reports that Alibaba (BABA) is developing its own AI chip, which sent Nvidia (NVDA) shares tumbling and pressured other AI infrastructure plays including AMD (AMD) and Taiwan Semiconductor (TSM). Meanwhile, a federal appeals court ruling declaring most Trump-era tariffs illegal adds another layer of uncertainty, with the case expected to reach the Supreme Court and potentially requiring tens of billions in reimbursements to importers.
This week begins with markets closed Monday for Labor Day, creating a compressed four-day trading period that culminates in Friday's crucial August jobs report, which is the final major employment data before the Fed's September meeting.
