The S&P 500 and the Nasdaq indexes were set to snap a three-week winning streak in a mixed session on Friday, as investors digested the latest inflation data amid expectations of aggressive interest rate cuts.
U.S. consumer spending increased slightly more than expected in August, while inflation continued to rise at a measured pace, data showed. Still, some analysts warned that the data may not fully reflect the inflationary impact of tariffs.
These concerns added to a tense week during which investors parsed through mixed signals from Fed policymakers, with some advocating for aggressive rate cuts and others urging a more cautious approach.
Richmond Fed Bank President Thomas Barkin, in an interview with Bloomberg Television, said he had very low confidence in inflation forecasts at present as tariffs continue to impact the economy.
“Corporates have been able to withstand tariff hit because they’ve had inventory-build. But the earnings season will become the bigger test because many companies have told us they will start some price increases around the end of the year,” said Kevin Gordon, senior investment strategist at Charles Schwab.
Investors will also monitor remarks from Fed Vice Chair for Supervision Michelle Bowman later in the day.
At 11:45 a.m. ET, the Dow Jones Industrial Average rose 213 points, or 0.46%, to 46,160.42. The S&P 500 .SPX gained 14.60 points, or 0.22%, to 6,619.32, while the Nasdaq Composite lost 27.02 points, or 0.12%, to 22,357.68.
The S&P 500 and the Nasdaq are on track for their worst weekly performance since late July.
Investors are also growing increasingly concerned about a potential government shutdown, which could disrupt key data releases and add another layer of uncertainty to the markets.
“If there is a shutdown, disruption to the data releases will be more extensive than it was during the partial shutdown in December 2018 to January 2019,” said Gary Schlossberg, market strategist at Wells Fargo Investment Institute.
Financials up about 1%, were among the biggest boosts to the S&P 500 on the day. A 4% gain in Boeing and 1% rise in Goldman Sachs and JPMorgan each supported the Dow.
Shares of truck maker Paccar which makes most of its trucks for the U.S. market domestically, gained 5.1% to top the S&P 500, a day after President Donald Trump unveiled fresh import tariffs, including on heavy-duty trucks, branded pharmaceutical products, kitchen cabinets and bathroom vanities and upholstered furniture. Drugmaker Eli Lilly N rose 1%.
In corporate news, GlobalFoundries jumped 8.7% after a report the U.S. was planning a chip production rule to curb reliance on overseas supply. Costco Wholesale fell 2.6% to the bottom of the S&P 500, after the company reported quarterly results.
Separately, the University of Michigan’s second and final take on September consumer sentiment was downwardly adjusted to 55.1 from its originally stated 55.4.
Advancing issues outnumbered decliners by a 2.27-to-1 ratio on the NYSE and by a 1.17-to-1 ratio on the Nasdaq.
The S&P 500 posted 25 new 52-week highs and two new lows, while the Nasdaq Composite recorded 52 new highs and 49 new lows.
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