Wall Street Stocks Dip After Record Highs on Inflation Concerns/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks slipped Friday, retreating from all-time highs after new inflation data showed steady but elevated price growth. Tech stocks like Nvidia, Dell, and Oracle dragged markets lower, while healthcare cushioned losses. Despite inflation pressures, investors still expect a Fed rate cut in September.
Stocks Market Quick Looks
- S&P 500 fell 0.5%, retreating from record high
- Dow Jones dropped 125 points (-0.3%)
- Nasdaq Composite slipped 0.9%, hit hardest by tech losses
- Dell Technologies plunged 9.7% despite strong revenue
- Nvidia (-2.8%), Broadcom (-2.7%), Oracle (-3.6%) also declined
- Inflation (PCE index): up 2.6% YoY, unchanged from June
- Core inflation: 2.9% (highest since February)
- Fed may cut rates in September, odds at 87% (CME)
- 10-year Treasury yield: 4.23%, up from 4.21%
- Markets closed Monday for Labor Day holiday
Deep Look: Wall Street Pulls Back After Record-Setting Highs
Stocks on Wall Street edged lower Friday morning as new inflation data dampened sentiment and technology shares weighed heavily on major indexes.
The S&P 500 declined 0.5%, a day after setting another all-time high. Despite the dip, the benchmark index is on track to end August up about 2%, marking a fourth consecutive month of gains.
The Dow Jones Industrial Average fell 125 points (0.3%), while the Nasdaq composite slipped 0.9%, dragged down by steep losses in the technology sector.
Tech Stocks Lead Decline
Technology companies were the hardest hit:
- Dell Technologies posted the biggest drop among S&P 500 stocks, sliding 9.7% after its second-quarter results showed margin pressures and weak PC revenue despite revenue exceeding forecasts.
- Nvidia fell 2.8%,
- Broadcom declined 2.7%,
- Oracle dropped 3.6%.
Gains in health care and other sectors helped offset some losses, but could not keep the market in positive territory.
Inflation Data Holds Steady
The Commerce Department reported that consumer prices, measured by the Personal Consumption Expenditures (PCE) index, rose 2.6% in July from a year earlier, the same annual pace as June.
However, core PCE inflation — which excludes food and energy — increased 2.9%, up from 2.8% in June and the highest level since February.
While well below the nearly 7% peak from three years ago, inflation remains above the Federal Reserve’s 2% target.
Federal Reserve Outlook
Markets remain focused on whether the Fed will cut interest rates in September. Fed Chair Jerome Powell signaled last week that policymakers may ease borrowing costs amid signs of a slowing labor market.
Government data shows job growth has cooled sharply since spring, with hiring averaging only 35,000 new jobs per month in recent months.
Ellen Zentner, chief economist at Morgan Stanley Wealth Management, said Friday:
“Today’s in-line PCE Price Index will keep the focus on the jobs market. For now, the odds still favor a September cut.”
According to CME Group data, traders see an 87% chance of a quarter-point rate cut at next month’s Fed meeting.
Bond Market and Global Trading
- 10-year Treasury yield climbed to 4.23% from 4.21%.
- 2-year Treasury yield held steady at 3.63%, closely tracking Fed expectations.
Meanwhile, European markets traded mostly lower, while Asian markets closed mixed.
What’s Next
The Fed will review two more inflation indicators before its September meeting — the Producer Price Index (PPI) and the Consumer Price Index (CPI). Unless those reports show a sharp rise, analysts expect a rate cut is almost guaranteed.
U.S. markets will be closed Monday for the Labor Day holiday.
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