Wall Street pulled back from record levels on Friday after inflation data showed prices holding above the Federal Reserve’s target.
The Dow Jones fell around 0.2%, the S&P 500 lost 0.6%, and the Nasdaq dropped 1.1%. Tech bore the brunt of the move, with Nvidia sinking more than 3% to close out the week following its heavily watched earnings.
The pressure came as July’s core Personal Consumption Expenditures index – the Fed’s preferred inflation gauge – rose 0.3% month-on-month and 2.9% year-on-year. Both matched forecasts but underlined how inflation remains stubbornly above the central bank’s 2% goal, marking the fastest annual pace since February.
Consumer sentiment added another sour note, with the University of Michigan survey hitting a three-month low as households flagged rising price expectations.
Even with Friday’s pullback, August still marked a strong month, the S&P 500 gained 1.4%, the Dow 2%, and the Nasdaq 1.6%, each logging their longest winning streaks in over a year. The Russell 2000 led the pack with a 6% monthly rise, its best run in more than four years.
Traders still expect the Fed to deliver a quarter-point cut in September, with futures pricing in an 87% chance of a move. Markets now head into the Labor Day weekend balancing record highs with signs that inflation is not letting go easily.
