U.S. equities ended lower on Friday as investors locked in profits ahead of the long weekend, despite the S&P 500 marking a fresh milestone this week and finishing August with its fourth consecutive monthly gain.
Market recap
The S&P 500 slipped 0.64% to close at 6,460.26, while the Nasdaq Composite dropped 1.15% to 21,455.55. The Dow Jones Industrial Average fell 92.02 points, or 0.20%, to settle at 45,544.88.
Even with Friday’s decline, all three major indexes closed the month higher: the Dow gained more than 3%, the S&P 500 advanced nearly 2%, and the Nasdaq added 1.6%.
Inflation in focus
The latest core PCE index — the Federal Reserve’s preferred inflation gauge — rose 2.9% in July, in line with forecasts but the highest reading since February. The report reinforced investor focus on the labor market as the Fed weighs a potential September rate cut.
“The Fed opened the door to rate cuts, but the size of that opening depends on whether labor-market weakness continues to look like a bigger risk than rising inflation,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Profit-taking after record highs
Analysts pointed out that Friday’s pullback came after a strong run that pushed the S&P 500 above 6,500 for the first time on Thursday. “The PCE number was fine, but there’s a bit of an earnings overhang and maybe just a little profit-taking after hitting an all-time high,” said Baird strategist Ross Mayfield.
