The Dow Jones Industrial Average achieved a remarkable milestone, closing at a record high on Friday as analysts scrutinized the latest economic data, including the Federal Reserve's favored inflation metric. The Dow ascended by 0.3% to reach 42,313 points, while the S&P 500 experienced a minor decline of 0.1%, settling at 5,738.2 points, retreating from Thursday's all-time peak.
The Nasdaq Composite also faced a drop, declining 0.4% to end at 18,119.6 points. Among the various sectors, technology witnessed the steepest drop, whereas energy emerged as the leader among gainers. In terms of weekly performance, the Nasdaq showed resilience, advancing nearly 1%, while both the Dow and the S&P 500 registered gains of 0.6% each. On the economic front, US consumer spending showed a sharper-than-anticipated slowdown in August, according to data released by the government.
Although the Fed's preferred inflation measure indicated a year-over-year increase, it aligned with Wall Street's expectations. Specifically, the Fed’s core inflation measure, which excludes the more volatile food and energy prices, rose by 2.7% annually last month, slightly up from 2.6% in July. In sequential terms, the core measure decreased to 0.1% from 0.2%. "The Fed's preferred core measure continues to move in a favorable direction, despite base effects inflating the yearly measure," TD Economics stated in a recent report.
"Given that inflation remains manageable, the Fed will be closely monitoring developments in the labor market, especially with the release of September payrolls data next Friday, which will inform further policy decisions." Consumer sentiment in the US displayed an uptick in September, while inflation expectations for the upcoming year dipped slightly, as reported by the final results from the University of Michigan's Surveys of Consumers. In the bond market, the US two-year yield experienced a decline of 6.6 basis points, bringing it down to 3.56% on Friday, while the 10-year rate fell by 3.7 basis points to 3.75%. Last week, the Federal Open Market Committee of the central bank decided to lower interest rates by 50 basis points, a move that contrasted with a consensus from Bloomberg indicating only a 25-basis-point reduction. "With the Fed indicating readiness to support the labor market and thereby the economy robustly, investors are increasingly speculative about the prospects of a soft landing and whether more substantial cuts are forthcoming," Stifel articulated in a Friday note to its clients.
"The diverse viewpoints shared by Fed officials this week highlight a notable absence of consensus among them." In commodity news, West Texas Intermediate crude oil gained 1.3% to reach $68.57 a barrel on Friday. In the stock market, HP's shares ($HPQ) fell by 3.9%, making it one of the poorest performers on the S&P 500, following BofA Securities’ decision to downgrade the stock from buy to neutral. On the flip side, Wynn Resorts ($WYNN) was recognized as the top gainer on the S&P 500, surging 7.2% after Morgan Stanley upgraded its rating from equal-weight to overweight and adjusted its price target upwards from $97 to $104. Tesla ($TSLA) is set to announce third-quarter vehicle deliveries that are anticipated to surpass Street estimates, buoyed by strength in its crucial China market, alongside stabilizing pricing and demand, according to a client note from Wedbush Securities.
The electric vehicle manufacturer saw its shares rise by 2.5% at closing. On the commodities front, gold fell by 0.7%, closing at $2,674.90 per troy ounce, while silver dropped 1.3% to $31.94 per ounce..