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?
-
TSA Expands PreCheck Access for Military Members, Families and VeteransEnhanced "Serve with Honor, Travel with Ease" initiative lowers barriers to expedited screening for service members and their loved ones.
-
What to Know About New Medicaid Cuts: Is Your Local Hospital Closing Soon?Tax Policy Trump’s ‘One Big Beautiful Bill’ is now law, and rural hospitals across the U.S. are on the chopping block.
-
Dividend Increases: 7 Stocks With Rising PayoutsWhile dividend growth has been slowing, certain stocks have raised their dividend payouts. These are some selections.
-
Key to Financial Peace of Mind: Think 'What's Next?' Rather Than 'What If?'Even if you've hit your magic number for retirement, it's hard to stop worrying about money. Giving it a clear purpose is one way to reduce financial anxiety.
-
Three Estate Planning Documents a Business Owner Can't Afford to SkipA business owner's estate plan should protect the company and its employees as well as the entrepreneur's heirs. These three documents are critical.
-
Stock Market Today: Trump's Copper Comments Cause a StirMarkets remain resilient and monetary policy makers stand fast against a rising tide of new terms of trade, including around copper.
-
Opportunity Zones: An Expert Guide to the Changes in the One Big Beautiful BillThe law makes opportunity zones permanent, creates enhanced tax benefits for rural investments and opens up new strategies for investors to combine community development with significant tax advantages.
-
Five Ways Retirees Can Keep Perspective Through Market JittersMarket volatility is a recurring event with historical precedents (the dot-com bubble, global financial crisis and pandemic), each followed by recovery. Here's how people who are near or in retirement can navigate economic uncertainty.
-
Stock Market Today: Trump Reextends His Tariff DeadlineWhen it comes to this president, his trade war, the economy, financial markets and uncertainty, "known unknowns" are better than "unknown unknowns."
-
Should You Start a 'Trump Account' for Your Child?"Trump Accounts" for kids is part of the One Big, Beautiful Bill that was just signed. Look at if it's worth it for your children.
