Q3 EPS guidance fell short—investors focused on forward uncertainty

Market Update – Tuesday, September 2, 2025

As September trading kicks off, markets are opening the week with a cautious tone. This is your Tuesday morning market update for September 2, 2025 — and the spotlight is squarely on forward earnings guidance, not just past results.

Despite a wave of solid Q2 earnings reports, several high-profile companies have missed the mark on Q3 EPS projections, raising fresh concerns about the strength of the economic and corporate outlook. From Dell and Marvell to Caterpillar, investors aren’t just reacting to current performance — they’re watching future guidance like hawks.

With key macroeconomic data, high-profile tech earnings, and the Federal Reserve’s next interest rate decision all on the horizon, market sentiment has taken a noticeably defensive turn to start the month.

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 A Look at the Numbers: Index Performance

 Friday, August 30 Wrap:

• Dow Jones Industrial Average: -0.20% to 45,544.88

• S&P 500: -0.64% to 6,460.26

• Nasdaq Composite: -1.15% to 21,455.55

 Weekly Returns:

• Dow Jones: -0.19%

• S&P 500: -0.10%

• Nasdaq: -0.19%

 August Performance:

• Dow Jones: +3.20%

• S&P 500: +1.91%

• Nasdaq: +1.58%

• Russell 2000: +6.8% (best month since Nov 2024)

Despite the shaky end to last week, all major indexes finished August in the green, with small caps outperforming thanks to rate-cut optimism.

 Guidance Over Results: Why Forward-Looking Numbers Matter

August’s earnings season wrapped up with mostly positive results, but Q3 guidance has cast a long shadow over the early September market mood.

🔹 Dell Technologies (DELL)

• Q2 earnings and revenue exceeded expectations

• AI server demand showed strong traction

• But Q3 EPS guidance came in light, triggering a ~9% drop in shares

🔹 Marvell Technology (MRVL)

• Q2 data center revenue rose 69% YoY

• However, revenue missed expectations and guidance disappointed

• Stock plunged double digits, extending YTD losses past 30%

🔹 Caterpillar (CAT)

• Solid Q2 report

• But warned of tariff headwinds and slower demand in the second half of the year

• Stock pulled back as industrial sector sentiment turned cautious

The takeaway? Even strong companies aren’t immune to macro pressures, and investors are prioritizing visibility into the next quarter over past wins.

Economic Backdrop: Data Deciding the Fed’s Next Move

Markets are still digesting last week’s July PCE inflation data, which came in line with expectations but highlighted ongoing price pressures:

• Headline PCE: +0.2%

• Core PCE: +0.3% MoM, +2.9% YoY (highest in five months)

• Supercore PCE (core services ex-housing): +0.4% — highest since February

While the numbers weren’t shocking, they did confirm inflation’s stickiness, which complicates the Fed’s decision-making.

Meanwhile, consumer sentiment is weakening:

• University of Michigan final August sentiment: 58.2 (down from July’s 61.7)

• Buying conditions for durable goods and consumer expectations both fell

• Inflation expectations for the year ahead ticked up to 4.8%

Fed Rate Cut Watch: All Eyes on Friday’s Jobs Report

Investors are laser-focused on Friday’s nonfarm payrolls report for August — the last major labor print before the September 17 Fed meeting.

Consensus Expectations:

• Jobs added: Below 100,000

• Unemployment rate: Expected to remain steady

• Labor force participation: Under the microscope

With July’s jobs report revised sharply lower, another weak print could strengthen the case for a rate cut this month. As of Friday, Fed futures markets priced in an 87% chance of a 25 bps cut, according to CME’s FedWatch Tool.

What Could Tilt the Fed:

• A soft jobs number

• More downward revisions to previous reports

• Further cooling in JOLTS data (out Wednesday)

Tech Still in the Driver’s Seat: Salesforce & Broadcom on Deck

With AI and cloud stocks still commanding outsized attention, Salesforce (CRM) and Broadcom (AVGO) earnings this week could influence sector and index performance.

🔹 Salesforce (Wednesday):

• Focus on enterprise software spending

• Analysts watching closely for commentary on AI integration and macroeconomic headwinds

🔹 Broadcom (Thursday):

• Expectations high following Nvidia’s recent report

• A bellwether for AI chip demand

• Any slowdown here could ripple across the entire tech sector

Sector Snapshot

Friday’s action suggested a modest “risk-off” rotation, with staples, health care, and energy sectors outperforming while tech and discretionary lagged.

Notable Movers to Close August

• 📉 Dell (DELL): -9% on weak guidance

• 📉 Marvell (MRVL): -12% on disappointing AI revenue outlook

• 🧨 Autodesk (ADSK): +9% on beat-and-raise quarter

• ⚙️ Caterpillar (CAT): Flat after tariff concerns

• 🥤 Consumer staples like PepsiCo, Coca-Cola, Hershey, and Domino’s gained on defensive flows and holiday demand optimism

Key Events This Week

Economic Calendar:

• Tuesday: ISM Manufacturing PMI

• Wednesday: JOLTS (Job Openings & Labor Turnover)

• Friday: August Nonfarm Payrolls

Earnings:

• Wednesday: Salesforce (CRM)

• Thursday: Broadcom (AVGO)

Wrapping Up: Market at a Crossroads

So far, September is shaping up to be a delicate balancing act for investors. While August delivered gains, the early September tone is far more uncertain, with weaker guidance, sticky inflation, and upcoming jobs data all creating a more cautious narrative.

Whether this week brings clarity or more confusion depends largely on tech earnings and the August jobs report. A soft labor print could give the Fed its green light — but anything stronger could throw cold water on the 87% probability of a rate cut.

FAQs

Q: Why did Dell and Marvell fall despite beating earnings?
A: Both companies beat Q2 expectations, but issued weaker-than-expected Q3 guidance, which shook investor confidence.

Q: Are rate cuts still expected in September?
A: Yes — markets are pricing in an 87% chance of a 25 bps cut. But this hinges heavily on Friday’s jobs data.

Q: What sectors are performing best right now?
A: Defensive sectors like consumer staples, health care, and energy are gaining favor amid forward uncertainty.

Q: Is tech still driving the market?
A: Tech remains key, but expectations are high, and any missteps from Salesforce or Broadcom could weigh heavily on sentiment.

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Content Disclosure: The information here is general and educational. It is not a substitute for professional advice and does not constitute a recommendation. Forecasts and opinions are subject to change.