Wall Street ended Friday, August 29, on a softer note, with all three major indexes dipping as fresh inflation data kept tariff concerns front and center.
Tech stocks, in particular, took the hardest hit, reminding investors that even the AI-driven market darlings aren’t immune to macroeconomic jitters.
The U.S. Commerce Department reported that the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, rose 2.6% year-over-year in July, exactly as economists expected. While that might sound like good news (no nasty surprises), it’s still above the Fed’s 2% target, fueling concerns that tariffs could make it even harder to cool inflation.
Adding to the tension, the U.S. just ended its tariff exemption on package imports under $800. This means higher costs for businesses and, ultimately, consumers. That’s not exactly the recipe for easing inflationary pressures.
Despite the sticky inflation numbers, Wall Street traders still expect the Fed to cut rates by 25 basis points in September. Fed Chair Jerome Powell’s recent dovish comments at Jackson Hole hinted that the central bank is shifting its focus from inflation to the labor market.
As Art Hogan of B Riley Wealth put it, Friday’s numbers “leave the door wide open for the Fed to go ahead and cut in their September 17 meeting.” Investors are now waiting for next week’s nonfarm payrolls report, which could make or break the case for a September rate cut.
Meanwhile, Fed Governor Christopher Waller, a potential candidate for the Fed’s top job, backed the idea of cutting rates next month, aligning with President Donald Trump’s calls to lower borrowing costs.
At mid-morning trading (09:43 a.m. ET), the numbers looked like this. The Dow Jones Industrial Average slipped 0.10% to 45,591.54, while the S&P 500 dropped 0.30% to 6,482.34. The Nasdaq Composite bore the steepest decline, falling 0.62% to 21,570.53.
Technology stocks led the losses, weighing heavily on overall performance. Dell tumbled 14.4% after issuing a disappointing forecast, while Marvell Technology fell 6.4% for similar reasons. Nvidia, one of the market’s most closely watched companies, shed 2.7% following warnings of weaker demand from China.
Still, reassurance from CEO Jensen Huang about ongoing strength in artificial intelligence demand helped ease fears of a deeper slowdown.
Meanwhile, Caterpillar, a bellwether for the global economy, dropped 3.1% after projecting higher tariff-related costs. In contrast, Autodesk stood out with an 11.2% gain after lifting its annual forecast, offering a rare bright spot in the session.
Amid the broader declines, the Russell 2000 index managed to buck the trend. The small-cap benchmark, which tends to reflect domestic economic activity more closely than its larger peers, inched up 0.1%.
This modest gain extended its reputation as one of August’s stronger performers, underscoring investor confidence in smaller, U.S.-focused companies despite the broader market’s struggles.
