U.S. stock futures signaled a potential recovery Friday after several sessions of declines, with investors showing interest in purchasing equities at lower levels. Recent dips had reflected concerns over elevated valuations and uncertainty surrounding the artificial intelligence sector.
Futures gained momentum following the release of August’s consumer price data from the Commerce Department, which came in line with economists’ expectations.
The personal consumption expenditures (PCE) price index rose 0.3% in August, following a 0.2% gain in July, meeting forecasts. The annual PCE rate ticked up to 2.7% from July’s 2.6%, also in line with expectations.
Core PCE, which excludes volatile food and energy prices, climbed 0.2% in August, matching revised July figures and predictions. Its annual growth held steady at 2.9%, reflecting the Fed’s preferred measure of inflation.
Despite this data, traders largely overlooked President Donald Trump’s latest tariff announcements. On Truth Social, Trump revealed plans to impose a 100% tariff on imported pharmaceuticals unless companies are producing in the U.S. He also announced a 25% duty on heavy trucks and a 50% tariff on kitchen cabinets, bathroom vanities, and related products, effective October 1.
Markets saw further retracement on Thursday, following two sessions of losses. The Nasdaq slipped 113.16 points, or 0.5%, to 22,384.70; the S&P 500 declined 33.25 points, or 0.5%, to 6,604.72; and the Dow fell 173.96 points, or 0.4%, to 45,947.32.
AI stocks were under pressure, with Oracle (NYSE:ORCL) dropping 5.6%, while Nvidia (NASDAQ:NVDA) recovered slightly after earlier declines.
Economic indicators added mixed signals. The Labor Department reported first-time jobless claims fell to 218,000 in the week ending September 20, a 14,000 decline from the previous week and below expectations of 235,000. “Claims are pulling back from nearly four-year highs in early September, approaching the lowest levels since July,” analysts noted.
Commerce Department data also showed a surprising rise in durable goods orders for August, alongside stronger-than-expected Q2 GDP growth.
Bill Adams, Chief Economist at Comerica Bank, commented, “The Fed’s September dot plot indicated that additional rate cuts are likely at their next two decisions in late October and December, but the case for back-to-back cuts is no slam dunk.”
Sector performance was uneven. Airline shares tumbled, with the NYSE Arca Airline Index dropping 2.9% to a one-month low. Pharmaceutical stocks fell 2.0%, marking a one-month closing low for the NYSE Arca Pharmaceutical Index. Biotechnology, healthcare, and computer hardware sectors were weak, while gold stocks were supported by a rise in bullion prices.
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