Stocks ended higher Friday as investors closed out a challenging month on Wall Street, with the Dow posting another record high close.
The Dow Jones Industrial Average surged 228.03 points, or 0.55%, to close at a fresh record high of 41,563.08. The S&P 500 gained 1.01% to 5,648.40, while the tech-heavy Nasdaq advanced 1.13% to end the session at 17,713.62.
At the end of August’s trading, the S&P 500 posted a 2.3% gain for the month, while the Dow climbed nearly 1.8%, according to CNBC. The Nasdaq clinched a 0.7% advance for the period. The S&P 500 notched its fourth straight winning month.
The Bureau of Economic Analysis's PCE Price Index showed core prices rose at an annual pace of 2.6% last month. The figure was just inside Wall Street's 2.7% forecast and was unchanged from June, which was the slowest reading since March 2021.
“This is as Goldilocks as it gets for PCE-consumer remains strong and disinflation is clear in the data,” said Jamie Cox, managing partner, Harris Financial Group. “However, there is no justification whatsoever for .50bps in September. The Fed will be able to normalize rates slowly, in .25 bps increments.”
Looking ahead, Adam Turnquist, chief technical strategist for LPL Financial, said that since 1950, the S&P 500 has generated an average return of -0.7% in September and finished higher only 43% of the time, making it the worst month for stocks on an average return and positivity rate basis.
"During the month, the index tends to trade sideways during the first half, with losses beginning to accumulate into month end," he said. "For this year, the midway point also happens to line up closely with the September 18 Federal Open Market Committee Meeting."
Updated at 10:38 AM EDT
Fading confidence
The University of Michigan's benchmark survey of consumer sentiment dipped modestly in August from the initial estimate, ending the month at 67.9 points, with only modest changes in inflation expectations.
The muted reading, which follows a series of retail sector warnings of a pullback in consumer spending over the back-end of the year, could signal further weakness in what has been a resilient portion of the domestic economy.
"Savings rates dropped to just 2.9% in July, from 3.1%. That is the second-lowest since 2008, and well below its pre-Covid average, just above 6%," said Ian Shepherdson of Pantheon Macroeconomics, citing data from the PCE inflation report.
"This looks unsustainably low now that pandemic-era excess savings have diminished significantly, and the ongoing softening in the labor market ought to lead to more precautionary saving," he added. "We expect a climb in the saving rate to dampen consumption growth significantly over the next few quarters."
Updated at 9:40 AM EDT
Final August open
The S&P 500 was marked 33 points higher, or 0.59%, in the opening minutes of trading, with the Nasdaq rising 139 points, or 0.79%.
The Dow, meanwhile, gained 131 points while the small-cap Russell 200 rose 12 points, or 0.55%.
Updated at 8:47 AM EDT
Move over inflation
The Fed's preferred inflation gauge held steady last month, with core prices rising 2.6% and the headline index up 2.5% in a report that is likely to cement the case for a September rate cut.
With no real surprises in the July PCE data, economists say the inflation story is stable enough to allow the Fed to focus on the second side of its dual mandate: ensuring full employment. Investors were get a host of data on that front next week, including a crucial August non-farm payrolls report.
Stock futures were little-changed following the PCE data release, with the S&P 500 indicated 22 points higher at the start of trading, and the Dow Jones Industrial Average called 65 points higher.
Benchmark 10-year note yields nudged 2 basis points higher to 3.875% following the data release, while 2-year notes rose to 3.925%.
Updated at 8:26 AM EDT
Intel breakup?
Intel (INTC) shares moved higher in active premarket trading Friday amid reports that the struggling chipmaker could split two key divisions, or scrub some of its foundry projects, as it looks to win back investor confidence.
Bloomberg reported that Intel is speaking with investment banks as part of a major turnaround effort that could see its chip product business hived off from its manufacturing division.
Intel shares were last marked 4.3% higher at $20.99 each, a move that would still leave the stock down more than 55% for the year
Stock Market today
Stocks ended mixed Thursday, with the Dow adding more than 200 points on the session to close at a record, powered in part by solid post-earnings gains for Salesforce (CRM) .
The S&P 500 and the Nasdaq were little changed as investors picked through details of Nvidia's (NVDA) highly anticipated fiscal-second-quarter update and its implications for the broader AI-investment thesis.
Markets were also buoyed by a better-than-expected reading for second-quarter GDP, which the Commerce Department upgraded to 3%. The move was thanks in part to a surprise surge in consumer spending and to a modest pullback in weekly jobless claims, which could suggest some late-cycle resiliency in the labor market.
Focus for the Friday session and ahead of the Labor Day holiday weekend will likely be the release of the Federal Reserve's preferred inflation gauge, the PCE Price Index, prior to the the start of trading.
Economists expect the report to show modest upticks in both the core and headline readings for the month of July, but not to a level that would call into question the central bank's signaling on near-term interest-rate cuts.
CME Group's FedWatch continues to point to around 100 basis points (1 percentage point) of Fed easing between now and the end of the year, with the odds of an outsized 50-basis-point reduction in September pegged at 33%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is up 1.26% for the month and 2.41% for the quarter, are indicating an opening bell gain of around 22 points.
Futures tied to the Dow, meanwhile, suggest an 80-point gain from last night's close, with the Nasdaq called 130 points higher.
Benchmark 10-year Treasury note yields were little changed at 3.856%, with 2-year notes pegged at 3.906% heading into the start of the New York trading session and the PCE inflation data at 8:30 a.m. U.S. Eastern Time.
Related: Housing market seeks Fed rate relief as sales slump and prices leap
Stocks on the move include Dell Technologies (DELL) , which jumped more than 5.8% to $117.15. The group said demand for AI-focused servers, tied to Nvidia chips, helped it top quarterly earnings forecasts and boost its full-year profit outlook.
Lululemon Athletica (LULU) was also moving higher, rising 4.24% in the premarket even as the upscale athletic clothing retailer trimmed its full-year sales forecast amid increasing competition and an anticipated pullback in consumer spending.
In overseas markets, Europe's Stoxx 600 extended its winning streak to a fourth week. The regional benchmark hit an all-time high in Frankfurt after data showed Eurozone inflation fell to the lowest level in three years, paving the way for more European Central Bank rate cuts.
More Wall Street Analysts:
- Analysts reboot Grand Theft Auto maker's stock price target
- American Express stock analyst flags concerning shift in consumer behavior
- Analyst resets Nvidia stock price target before earnings
Overnight in Asia, the Nikkei 225 ended the week 0.74% higher at 38,647.75 points, a move that nudged the benchmark into positive territory for the month.
The regionwide MSCI ex-Japan benchmark, meanwhile, rose 0.6% into the close of trading, with broader Asian shares rising for a fourth consecutive month.
Related: Veteran fund manager sees world of pain coming for stocks
