Relatively tame inflation data boosted the main U.S. equity indexes into Friday's opening bell, and fresh confirmation of fading consumer sentiment proved only a temporary headwind. Markets appear to be taking new tariffs on trucks, drugs and kitchen cabinets in stride into the last weekend of September.
The final trading session of the week was up, down and up again, with the Fed's preferred inflation gauge printing in line with expectations. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index (PCE) rose 0.3% month over month and 2.7% year over year in August.
Core PCE, which excludes food and energy prices, was up 0.2% and 2.9%, also in line with expectations. As LPL Financial Chief Economist Jeffrey Roach notes, core PCE "showed signs of normalcy" last month.
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"If businesses remain in a 'low hire – low fire' mode," Roach concludes, "the job market should remain stable enough to keep the economy out of recession." This could prove challenging for a Fed that would like to cut interest rates "without stoking greater inflation pressure."
At Friday's closing bell, the tech-heavy Nasdaq Composite had added 0.4% at 22,484, trimming its loss for the week to 0.7%. The Nasdaq remains on track to post a monthly gain for September.
The broad-based S&P 500 rose 0.6% to 6,643, stopping its three-session losing streak, finishing the week with a loss of 0.3% but staying positioned for a monthly gain too.
The blue-chip Dow Jones Industrial Average was up 0.7% at 46,247, closing higher for the first time since Monday but posting a 0.1% five-day loss. Still, the Dow is also on track for a positive September.
BA gets some lift
Boeing (BA, +3.6%) took off and was the top performer among the 30 Dow Jones stocks Friday after the Federal Aviation Administration cleared the aircraft maker to issue its own airworthiness certificates for some 737 MAX and 787 airplanes starting Monday.
"This decision follows a thorough review of Boeing's ongoing production quality and will allow our inspectors to focus additional surveillance in the production process," the FAA said. The regulator "will continue to maintain direct and rigorous oversight of Boeing's production processes."
Meanwhile Turkish Airlines agreed to purchase 75 Boeing 787 twin-aisle jets and up to 150 smaller 737 MAX single-aisle jets. Boeing also announced a new order for 30 737 MAX jets from Norwegian Group.
Morgan Stanley analyst Kristine Liwag reiterated her Equal-weight (or Hold) rating and her $235 12-month target price for BA stock in a Friday morning note, explaining that a positive shift in sentiment over the past year appeared to pause after CEO Kelly Ortberg acknowledged some production problems in mid-September.
Friday's price action suggests the resumption of a "positive shift" driven by "steadily improving 737 MAX and 787 deliveries."
COST provides more retail clues
Costco Wholesale (COST, -2.9%) highlighted an earnings calendar that remains light in terms of number of names but heavy with information about the behavior of the American consumer.
The warehouse retailer reported fiscal 2025 fourth-quarter revenue of $86.2 billion (+8.1% year over year) and earnings of $5.87 per share (+11.0% YoY), topping consensus forecasts of $86.0 billion and $5.80, respectively.
The consumer staples stock suffered in the eyes of investors because same-store sales were 5.7% vs expectations of 5.9% and down from 6.9% a year ago.
UBS analyst Michael Lasser reiterated his Buy rating and his 12-month target price of $1,205 on COST following management's report. According to Lasser, Costco is "proving that it can sustain" its core margin growth momentum" and this "alongside its effective tariff management levers should support the stock's valuation."
Consumers are concerned about inflation and jobs
Inflation remains a major source of frustration, with 44% of respondents to the University of Michigan Surveys of Consumers "spontaneously mentioning" high prices as a threat to their personal finances, the highest reading in a year.
The final read for the September surveys shows sentiment confirmed its initial print "and eased about 5% from last month," according to survey director Joanne Hsu.
Sentiment is above its April and May lows, and the decline "was relatively modest," though Hsu adds that it "was still seen across a broad swath of the population." Consumers are also concerned about the risks of a weaker labor market.
The release of the nonfarm payrolls report for September on Friday, October 3, is the highlight of next week's economic calendar.
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