US stocks fell on Friday after the S&P 500 (^GSPC) notched a record high amid deteriorating consumer sentiment. The S&P 500 declined by about 0.2% but capped its third consecutive weekly gain. The Dow Jones Industrial Average (DJI) also dropped 0.2%, closing out the week with a loss, while the Nasdaq Composite (^IXIC) fell about 0.3%, eking out a slight gain for the week.
Investors turned cautious in afternoon trading after a preliminary reading of August consumer sentiment from the University of Michigan showed that Americans grew more dour on the economy as inflation remained top of mind. Oil prices also rose, adding pressure amid low-volume summer trading. Stocks have been fueled by strong earnings.
With no major reports on the calendar for Friday, attention is turning to a series of retail earnings next week, including Target (TGT) and Walmart (WMT), before Nvidia's (NVDA) highly anticipated report the week after, on Aug. 26. On the economic data front US retail sales fell the most in more than a year last month, according to new data released Friday by the Census Bureau. Stocks retreated on Friday with the S&P 500 (GSPC) slipping about 0.2% from all-time highs.
The broad-based index, however, still closed out its third consecutive week of gains. The Nasdaq Composite (IXIC) slipped 0.3% while the Dow Jones Industrial Average (DJI) also fell 0.2%. Friday's action wraps up a week of growing optimism that the Federal Reserve will keep rates steady at its next policy meeting in September.
Meanwhile, the AI trade remained a focus for investors, with expectations that bellwether Nvidia (NVDA), which is set to report earnings later this month, will signal continued demand for its chip architecture. Yahoo Finance’s Jennifer Schonberger reports: When Federal Reserve officials gather in Jackson Hole in two weeks, they will confront a decisive moment for the US economy. While stubborn inflation plagued the first half of the year, last month's cooling prices raise a critical question: Can the central bank afford to hold interest rates steady in September, or are these early signs of inflation relief just a head fake?
All eyes will be on Chairman Kevin Warsh's speech — his first as Fed chair — to see whether he addresses the economic outlook, inflation, and monetary policy. Fed chairs have historically used the Jackson Hole forum to set the table for upcoming September policy actions or announce major structural shifts. The vast amount of debt issuance to fund hyperscalers' build-out of AI and data centers is starting to crowd out long-dated US bonds, driving yields higher.
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