Wall Street’s main stock indexes fell on Friday, with technology stocks declining the most, after inflation data came in higher than the central bank’s target as expected and stoked concerns of tariffs feeding into prices.
The in-line numbers did little to change bets of an interest-rate cut from the Federal Reserve in September, especially considering Chair Jerome Powell’s dovish comments at Jackson Hole where he acknowledged labor market weakness.
A Commerce Department report showed the Fed’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, rose 2.6% in July as expected on an annual basis – above the central bank’s 2% target.
A measure of underlying prices suggested U.S. tariffs on imports were starting to reflect in the prices of some goods.
The U.S. tariff exemption for package imports valued under $800 also ended on Friday, raising costs for businesses and, in turn, consumers.
Traders are still pricing in a 25-basis-point rate cut in September, according to data compiled by LSEG.
“The numbers released today… leave the door wide open for the Fed to go ahead and cut in their September 17 meeting,” said Art Hogan, chief market strategist at B Riley Wealth.
Nasdaq edges down as Nvidia falls on China market uncertainty
While underlying price pressures are increasing, the central bank has most likely shifted its focus to shoring up the job market, Hogan said.
Next Friday’s nonfarm payrolls report will offer more insight on the labor market.
Fed Governor Christopher Waller, a candidate for the central bank’s top job, said on Thursday he wants to start cutting rates next month, in line with President Donald Trump’s calls to lower borrowing costs.
At 09:43 a.m. ET, the Dow Jones Industrial Average fell 45.36 points, or 0.10%, to 45,591.54, the S&P 500 lost 20.03 points, or 0.30%, to 6,482.34 and the Nasdaq Composite lost 134.63 points, or 0.62%, to 21,570.53.
Rate-cut bets have put Wall Street’s main indexes on track for their fourth straight month of gains. The domestically focused Russell 2000 index has benefited the most and outperformed the main indexes in August. It was up 0.1% on Friday.
Technology stocks weighed on the S&P 500, but seven other sectors rose as investors pivoted to other pockets of the market.
Personal computer maker Dell and chipmaker Marvell fell 14.4% and 6.4% after their quarterly forecasts missed expectations.
Nvidia lost 2.7%, a day after the AI chip leader’s dour China market expectations jolted investors accustomed to blockbuster forecasts from the company. Still, strength in its overall results and bullish comments from CEO Jensen Huang calmed worries of an imminent slowdown in demand for artificial intelligence.
Attention will now be on a court hearing at 10 a.m. ET wherea federal judge will consider whether to temporarily block President Trump from firing Federal Reserve Governor Lisa Cook.
Among others, global economy bellwether Caterpillar lost 3.1% after raising its annual estimate for tariff-related costs.
Design software company Autodesk rose 11.2% after raising its annual results forecasts.
Advancing issues outnumbered decliners by a 1.53-to-1 ratio on the NYSE and by a 1.07-to-1 ratio on the Nasdaq.
The S&P 500 posted 19 new 52-week highs and no new lows while the Nasdaq Composite recorded 43 new highs and 24 new lows.
