Tech Rally Anchors Market Amid Mixed Economic Signals

Market Intelligence Briefing – Tech Rally

Last Updated: Thursday, September 4, 2025

Market Snapshot

The market is exhibiting a divided dynamic this morning. On one hand, technology stocks rally, providing a strong pillar of support, driven by recent positive news and a shift in market sentiment. On the other hand, weakness is clearly persisting in other sectors, particularly those sensitive to broader economic shifts and the potential for new tariffs, creating a notable split in performance.

1. A significant catalyst from yesterday was the favorable antitrust ruling for Alphabet (GOOGL), which not only lifted its shares but also provided a strong boost to the broader tech sector, including Apple (AAPL).
2. The prevailing narrative is that a cooling labor market, reinforced by recent data, is increasing the probability of a Federal Reserve rate cut later this month.
3. This sentiment is driving down bond yields and supporting risk-on assets, especially growth-oriented tech names. However, concerns over future inflationary pressures from tariffs and some mixed corporate earnings reports are creating a cautious undertone, leading to a mixed picture across the major indices

Key Market Drivers

• Weakening U.S. Labor Market Data: Recent reports, including the latest JOLTS data, show job openings falling to multi-year lows, reinforcing the view that the labor market is cooling and bolstering expectations for a September Fed rate cut.
• Favorable Antitrust Ruling for Big Tech: A court ruling that did not force a breakup of Alphabet (GOOGL) and upheld its lucrative search deal with Apple (AAPL) has significantly boosted the technology and communication services sectors, providing a strong positive anchor for the market.
• Corporate Earnings & Guidance: Mixed corporate results and guidance, particularly from retail and enterprise software companies like Salesforce (CRM), are highlighting uneven performance and adding selective volatility, tempering the broader market’s upward momentum.
• Anticipation of Key Economic Reports: Markets are in a holding pattern ahead of the upcoming ADP Employment Report today and the pivotal Nonfarm Payrolls report on Friday, as traders look for further confirmation of the cooling labor market trend.

Upcoming Session Outlook

Directional Bias: Bullish – The market’s bullish bias is primarily fueled by the strong conviction that the Federal Reserve will cut rates. The recent weak labor data and the continued resilience of megacap technology stocks, following a major legal catalyst, provide a strong foundation for this outlook. While some sectors show weakness, the overall sentiment is risk-on, with capital flowing into growth stocks.

Sectors to Watch:

• Technology: May outperform the broader market as falling bond yields make future earnings more valuable. Megacap tech, in particular, will be in focus as investors continue to digest yesterday’s favorable ruling for Alphabet (GOOGL).
• Retail: Likely to face continued volatility. Yesterday’s mixed results from companies like Macy’s (M) and Dollar Tree (DLTR) show a clear divide between strong and weak performers, and sensitivity to tariff-related cost pressures will be a key theme.

Potential Volatility Catalyst: The U.S. ADP Employment Report, set for release this morning, could significantly alter the outlook. A surprisingly strong number could challenge the current Fed rate cut narrative, potentially leading to a sharp reversal in market sentiment, a rise in bond yields, and pressure on rate-sensitive stocks.

Confidence Level: Medium – The market’s direction is highly dependent on today’s ADP report and the Nonfarm Payrolls report tomorrow. While the current narrative is bullish, it is built on the premise of a weakening labor market, a thesis that could be quickly dismantled by a single strong data point.

Morning Market Movers

Trading Higher

• Alphabet Inc. (GOOGL): The stock surged over 9% after a federal judge ruled in its favor in an antitrust case, avoiding a forced breakup of its core business.
• Macy’s (M): The retailer jumped over 17% after reporting stronger-than-expected quarterly profit and revenue and raising its full-year guidance.
• Apple Inc. (AAPL): Shares climbed over 3% as the court ruling on Alphabet (GOOGL) stopped short of disrupting its lucrative search deal with Google, a significant revenue stream.
• Credo Technology Group Holding Ltd. (CRDO): The stock is higher on strong demand for its AI-related connectivity solutions, signaling continued strength in the AI infrastructure space.

Trading Lower

• Salesforce, Inc. (CRM): The company’s stock fell more than 6% in premarket trading following weak revenue guidance, raising concerns about enterprise software demand.
• Dollar Tree, Inc. (DLTR): The retailer saw its stock decline over 7% despite beating earnings forecasts, as analyst concerns over high expectations and tariff-related cost pressures weighed on the stock.
• Smithfield Foods (SFD): The stock is down after the company announced a secondary public offering of 16 million shares.

Disclaimer: This analysis is based on publicly available information and is for informational purposes only. It does not constitute financial advice. Market conditions are dynamic, and predictions are inherently uncertain.