Tech Stocks Cool as Fed Tensions Rattle Markets

Global equity markets paused on July 24, 2025, as major tech stocks retreated and political pressure mounted on the U.S. Federal Reserve. After weeks of strong gains, investor enthusiasm cooled amid rising scrutiny of central bank policy and concerns about market concentration in artificial intelligence-related sectors.

Megacap technology stocks led the pullback, with names like Nvidia, Apple, and Alphabet slipping after reaching record valuations earlier this month. Analysts cited profit-taking ahead of earnings reports, as well as growing caution about stretched valuations. Despite this, around 80% of S&P 500 companies that have reported so far have beaten earnings expectations, helping to cushion the broader market.

Market sentiment was further shaken by renewed criticism of Federal Reserve Chair Jerome Powell. U.S. President Donald Trump publicly rebuked Powell as a “numbskull” in a press conference, raising fresh questions about the central bank’s independence. The comments sparked speculation over Powell’s future, with some analysts—including Mohamed El-Erian—suggesting that the Fed chief could face pressure to step down.

In the bond market, yields declined modestly as investors rotated into safe-haven assets. The U.S. dollar also slipped against major currencies, reflecting uncertainty about future monetary policy. Meanwhile, analysts are closely watching for clues from upcoming Fed speeches and inflation data to gauge the likelihood of rate cuts later in the year.

The AI sector, which now represents over 34% of the S&P 500 by market cap, remains a focal point for investors. While many see parallels to the dot-com boom of the 1990s, concerns are growing that over-reliance on a handful of dominant tech names could expose markets to higher volatility.

As earnings season continues and geopolitical tensions persist, traders are adopting a more cautious stance. The coming weeks will be critical in determining whether tech-led momentum can resume or if broader market rotation will take hold.