US stocks fell from record highs on Friday as Wall Street digested an update on consumer inflation that showed prices firming higher above the Fed’s target in July.
The Dow Jones Industrial Average (^DJI) fell nearly 0.5%, and the S&P 500 (^GSPC) fell about 0.7%. The tech-heavy Nasdaq Composite (^IXIC) led the retreat, down 1%.
A key Fed-watched measure of inflation rose as expected in July, new government data showed Friday. The “core” Personal Consumption Expenditures index, closely studied by the central bank, rose 0.3% on a monthly basis and 2.9% on an annual basis, above the Fed’s 2% inflation target. Both numbers matched economist expectations, though the annual pace marked the biggest rise since February.
The Fed-favored data comes after signs of a resilient economy helped lift the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) to new all-time highs on Thursday.
Bets that the Fed will ease rates at its September meeting were still riding high Friday, and traders were pricing in an 87% chance of a quarter-point cut following the PCE reading.
Expectations for a rate cut have risen since Chair Jerome Powell opened the door during his policy speech in Jackson Hole last week. And on Thursday, Fed Governor Christopher Waller said he wants to cut rates in September and “fully expects” more cuts in the months that follow amid cracks in the labor market.
The inflation data caps a whirlwind week for markets gripped by Nvidia (NVDA) earnings and President Trump’s effort to oust its governor Lisa Cook, which took a new turn. On Friday, a judge is expected to rule on a bid from Cook for a temporary restraining order.
Despite the pullback in stocks Friday, the major indexes were all set for their longest streak of consecutive monthly gains in more than a year.
The tech-heavy Nasdaq Composite (^IXIC) was set to see a 2% bump in August, marking its fifth straight monthly rise, the longest winning streak in nearly a year and a half. For their part, the S&P 500 (^GSPC) and the Dow (^DJI) were set for their fourth consecutive month of gains, on track to add 1.6% and 2%, respectively — the longest since September 2024.
And the Russell 2000 (^RUT), which includes small market capitalization companies, eyed a 6% jump for August, set for its fourth monthly uptick, the longest streak in over four years.
Markets are closed Monday for the Labor Day holiday.
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Nasdaq set for 5 month winning streak, longest since March 2024
The three major gauges were set for another month of gains despite a pullback Friday.
The tech-heavy Nasdaq Composite (^IXIC) was set to see a 2% gain in August, marking its fifth straight month of gains, the longest winning streak in a year and a half — showing that even a short-lived tech selloff this month, concerns over an AI bubble, and a tepid response to Nvidia’s (NVDA) earnings haven’t hampered markets’ record breaking rallies. The Nasdaq’s last five month streak ended in March 2024.
Meanwhile, the S&P 500 (^GSPC) and the Dow (^DJI) were set for their fourth month of gains, on track to add 1.6% and 2%, respectively — the longest since September 2024.
The Russell 2000 (^RUT), which includes small market capitalization US companies, was also set for a fourth straight month of gains, the longest streak since June 2021. The index eyed a 6% gain for August.
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Stocks retreat from record highs at the opn
US stocks pulled back from record highs on Friday as Wall Street digested the latest reading of the Federal Reserve’s preferred inflation gauge, which showed prices rising above the central bank’s 2% inflation target but in line with economists’ expectations.
The Dow Jones Industrial Average (^DJI) dipped 0.15%, and the S&P 500 (^GSPC) fell about 0.2%. The tech-heavy Nasdaq Composite (^IXIC) led the retreat, down 0.4%.
But Wall Street stocks are still on track solid monthly gains as they hold their ground in record territory. The S&P 500 eyed a 1.9% gain for August after crossing 6,500 for the first time, while the Dow was set to rise 2.1%. The Nasdaq Composite is on track to notch a 2.5% bump.
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Celsius stock spikes after PepsiCo boosts stake in the energy drink company
PepsiCo Inc. (PEP) is increasing its stake in Celsius Holdings Inc. (CELH) to 11% from 5% previously, the companies announced on Friday.
As part of the $585 million deal, Celsius will acquire PepsiCo’s Rockstar brand in the US and Canada (Pepsi will still retain the business internationally). Celsius also recently acquired another energy drink brand, Alani Nu, which will move to Pepsi’s distribution network.
Celsius stock popped 6.7% in premarket trading while Pepsi shares were little changed.
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Fed’s preferred inflation gauge ticks up in July, in line with estimates
The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases ticked higher in July but have not seen the full impact of President Trump’s tariffs yet.
The “core” Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month, in line with economists’ expectations.
Core prices rose 2.9% in July on an annual basis, above the Fed’s 2% inflation target and in line with economists’ estimates.
Following the release, markets were pricing in an 85% chance the Fed will cut rates at its September meeting, up from a 63% chance a month ago, per the CME FedWatch Tool.
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Caterpillar stock sinks as tariff costs balloon, Norway
An additional tariff warning and clash with Norway pushed Caterpillar (CAT) shares nearly 3% lower on Friday morning.
On Thursday, the construction machinery maker stated it expects to see a greater hit from tariffs this year than previously thought. The company said it anticipates a tariff hit of $1.5 billion to $1.8 billion this year, above its prior forecast of up to $1.5 billion, which the company issued with its earnings release on Aug. 5.
It expects tariff costs of $600 million for the third quarter, up from a prior forecast of up to $500 million.
Caterpillar stock is also under pressure after Norway’s $2 trillion sovereign wealth fund, the world’s largest, said on Monday it sold all its shares in the company. The fund’s Council on Ethics flagged the company’s supply of bulldozers in Israel that are used in the occupation of Gaza and the West Bank.
Norway’s prime minister tried to defuse the controversy after Trump ally Sen. Lindsey Graham called the decision “offensive” and suggested that the US should impose additional tariffs on Norway.
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Packages under $800 have been able to avoid tariffs for years. Not anymore.
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Nvidia’s Big Tech clientele looks like a vulnerability, but acts like a chokehold
What looks like a client bottleneck is actually an industry chokehold, according to Yahoo Finance’s Hamza Shaban.
He reports in today’s Morning Brief:
Read more here.
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Good morning. Here’s what’s happening today.
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Premarket trending tickers: Dell, Affirm and Alibaba
Here’s a look at some of the top stocks trending in premarket trading:
Dell Technologies (DELL) stock fell 6% in premarket trading as a as a gloomy quarterly profit forecast and weaker-than-expected second-quarter margin rate overshadowed upbeat full-year estimates.
Affirm (AFRM) shares soared 15% before the bell after the company turned a profit in its fourth quarter fiscal earnings and exceeded both earnings and revenue estimates.
Alibaba (BABA) stock rose more than 2% before the bell on Friday after reporting a surge in revenue from China’s AI boom, helping offset a surprise drop in profit tied to a worsening battle with Meituan (3690.HK, MPNGY) and JD.com Inc. (JD) in internet commerce.
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Marvell shares slump as data center outlook stokes AI chip worries
Marvell Technology (MRVL) stock tumbled almost 13% in Friday’s premarket trading after the chipmaker’s forecast for data-center-related demand fell short of high expectations.
Wall Street has been betting that cloud giants such as Microsoft (MSFT) and Amazon (AMZN) would clamor for chips customized for AI workloads.
Reuters reports:
Read more here.
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Fed’s Waller backs September rate cut, expects more in next 3-6 months
Christopher Waller has signaled he wants the Federal Reserve to start lower interest rates with a quarter-point cut in September, with more easing to follow in the months after.
The Fed governor stepped up his call to reduce short-term borrowing costs as President Trump ramps up pressure on the central bank in a push for rate cuts. Waller is said to be under consideration by Trump to replace Jerome Powell when the Fed chair likely steps down next year.
Reuters reports:
Read more here.
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China’s $1.3 trillion stock surge raises questions about staying power
Chinese stocks capped another strong week of gains, intensifying a debate over the fate of a rally that’s defied the nation’s economic troubles to add $1.3 trillion in market value just this month.
Bloomberg reports:
Read more here.
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Gold pushes back towards record highs in second weekly gain.
Gold (GC=F) has seen consecutive weeks of gains to push back towards records set in April. Fears around the Fed’s independence and the upcoming inflationary report have made the precious metal an attractive prospect to investors seeking stability.
Bloomberg reports:
Read more here.
