US stocks retreated from record highs on Friday as Wall Street digested an update on consumer inflation that showed prices firming higher above the Fed’s target in July.<\/p>\n
The Dow Jones Industrial Average (^DJI<\/a>) fell around 0.2%, and the S&P 500 (^GSPC<\/a>) lost 0.6%. The tech-heavy Nasdaq Composite (^IXIC<\/a>) led the retreat, down over 1.1%. Big Tech slumped, with Nvidia (NVDA<\/a>) declining over 3% to end the week after releasing its highly anticipated earnings report.<\/p>\n After hitting record highs in August, the S&P 500 and Dow ended the month with gains of 1.4% and 2%, respectively, marking the fourth straight month of gains for those indexes. The Nasdaq also capped August with a 1.6% gain in its fifth straight winning month.<\/p>\n A key measure of inflation rose as expected in July, new government data showed Friday. The “core” Personal Consumption Expenditures index, closely studied by the central bank, rose 0.3% on a monthly basis and 2.9% on an annual basis, above the Fed’s 2% inflation target. Both numbers matched economist expectations, though the annual pace marked the biggest rise since February.<\/p>\n<\/p>\n Meanwhile, US consumer sentiment declined to a three-month low as consumers in a University of Michigan survey suggested they expect inflation to surge over the next year.<\/p>\n Friday’s data comes after signs<\/a> of a resilient economy helped lift the S&P 500 and Dow Jones Industrial Average to new all-time highs on Thursday.<\/p>\n Bets that the Fed will ease rates at its September meeting were still riding high Friday, and traders were pricing in an 87% chance<\/a> of a quarter-point cut following the PCE reading.<\/p>\n The inflation data caps a whirlwind week for markets gripped by Nvidia earnings and President Trump’s effort to oust Fed governor Lisa Cook, which took a new turn<\/a>. On Friday, a judge is expected to rule on Cook’s bid for a temporary restraining order.<\/p>\n Despite the pullback in stocks on Friday, the major indexes were set for their longest streak of consecutive monthly gains in more than a year.<\/p>\n The tech-heavy Nasdaq Composite was on track to see a 2% bump in August, marking its fifth straight monthly rise, the longest winning streak in nearly a year and a half. For their part, the S&P 500 and the Dow were set for their fourth consecutive month of gains, on track to add 1.6% and 2%, respectively \u2014 the longest since September 2024.<\/p>\n