Joey Solitro
Stocks were choppy Friday as volume thinned out ahead of the long holiday weekend. As a reminder, Monday is a stock market holiday, with both the equities and bond markets closed for Labor Day. Today, though, investors took in a not-too-terrible update on inflation and a round of concerning retail earnings.
Starting with the economic data. All eyes were on this morning's release of the Personal Consumption and Expenditures (PCE) Price Index, the Fed's preferred inflation measure, which rose 0.2% month-over-month in July and was up 2.5% year-over-year. Core PCE, which excludes volatile food and energy prices, increased 0.2% on a monthly basis and was up 2.6% from the year-ago period.
The data also showed that personal income rose at a slightly higher-than-expected 0.3% rate, while the 0.5% increase in consumer spending matched economists' forecasts.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Regarding this morning's PCE that came in as expected, no news is good news," said Gina Bolvin, president of Bolvin Wealth Management Group, in a statement. "The runway is all clear for the Fed to cut rates in September. The only question is if the cut will be 0.25% or 0.50%."
According to CME Group's FedWatch Tool, futures traders are currently pricing in a 69.5% chance the central bank will lower the federal funds rate by a quarter-percentage point at its next meeting. Odds for a half-percentage-point cut are at 30.5%.
Elsewhere, data from the University of Michigan showed its Consumer Sentiment Index rose to 67.9 in August from 66.4 in July. The survey also showed that households' one-year inflation expectation now sits at 2.8%, down from 2.9% in July. The five-year inflation expectation remained unchanged at 3%.
Wall Street says buy the dip on Ulta
In single-stock news, Ulta Beauty (ULTA) stock sank 4% after the beauty retailer came up short of top- and bottom-line expectations for its second quarter and lowered its full-year outlook.
However, this is just more of the same for the consumer discretionary stock. While shares got a short-lived boost earlier this month on news Ulta was added to Warren Buffett's Berkshire Hathaway equity portfolio in Q2, they remain 28% lower for the year to date.
Still, Oppenheimer analyst Rupesh Parikh (Outperform, the equivalent of a Buy) "looks favorably on ULTA's long-term prospects," citing the company's differentiated offerings, potential to deliver above-average growth rates in retail, and strong management as some of the reasons he is bullish.
"We continue to view ULTA shares as appropriate for longer-term players and would take advantage of any dips from here," Parikh adds.
Lululemon slips after top-line miss
Lululemon Athletica (LULU) stock edged up 0.2% after the athleisure company reported lower-than-expected revenue for its second quarter and cut its full-year outlook due to "uncertainties in the macro environment."
Wall Street doesn't seem too worried about LULU's short-term struggles. "Lululemon has a strong brand and growing e-commerce sales, which we expect will lead to higher margins over the next several years," says Argus Research analyst John Staszak, who maintained a Buy rating on the stock after earnings. "In all, we believe that the company's prospects are among the best in the apparel sector."
As for the main indexes, the Dow Jones Industrial Average rose 0.6% to 41,563 – good for a new record closing high – the S&P 500 added 1.0% to 5,648, and the Nasdaq Composite gained 1.1% to 17,713. Stocks closed mixed on the week, but higher on the month.
Related content
- Earnings Calendar and Analysis for This Week (September 2-6)
- Dell Stock: Wall Street Sees More Upside After Earnings
- When Is the Next Jobs Report?
-
Stock Market Today: Dow Dives 1,679 Points on Trump Tariff ShockU.S. stocks lost roughly $3.1 trillion in market cap on Thursday – the biggest one-day decline since the start of the COVID-19 pandemic in March 2020.
-
Did Florida’s Chance at $1,000 in Property Tax Rebates Vanish?State Taxes The Florida Legislature bypassed Gov. Ron DeSantis’ wish to cut property taxes and instead voted to lower the state’s sales tax.
-
Stock Market Today: Dow Dives 1,679 Points on Trump Tariff ShockU.S. stocks lost roughly $3.1 trillion in market cap on Thursday – the biggest one-day decline since the start of the COVID-19 pandemic in March 2020.
-
Wall Street Is Worried About Apple Stock. Should You Be Too?Analysts expect Trump's sweeping tariffs to have an outsized impact on Apple stock. How concerned should investors be?
-
The Stock Market Is Selling Off. Here's What Investors Should DoInvestors are fleeing the equities market en masse in response to the Trump administration's "jaw-dropping" tariffs. But the experts say don't panic.
-
How Building Liquidity Into Your Retirement Plan Can Pay OffTo succeed in investing for retirement, you need time and discipline — liquidity can give you both.
-
Striking Oil in Opportunity Zones: Now Might Be the Best Time to InvestYou could unlock hidden wealth in QOZs with strategic oil and gas investments, potentially combining tax advantages with long-term growth in an essential industry.
-
Stock Market Today: It's the Old Up-Down Again on Liberation DayMarkets look forward to what comes with the reordering of 80-year-old global trade relationships.
-
Can a New Manager Cure Vanguard Health Care Fund?Vanguard Health Care Fund has assets of $40.5 billion but has been ailing in recent years. With a new manager in charge, what's the prognosis?
-
What You Don't Know About Annuities Can Hurt YouLack of awareness leads many to overlook these potent financial tools, and with the possibility of running out of money in retirement, that could really hurt.
