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?
-
Ten Cheapest Places to Live in TexasProperty Tax Looking for a cheap place to live in Texas? Look no further. These counties have the lowest property tax bills in the Lone Star State.
-
AI Is Missing the Wisdom of Older Adults: What It Means for YouAI will increasingly affect your healthcare and finances, but young workers are primarily designing the systems and getting most of the jobs.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
Stock Market Today: Good Feelings and Solid Data Lift StocksResilience and de-escalation defined another generally positive day for financial markets.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
