S&P 500 Slips on Weak Consumer Sentiment and Higher Inflation Expectations, But Weekly Gains Hold
The S&P 500 dipped on Friday after disappointing consumer sentiment data and a jump in inflation expectations. Despite the decline, the index remains on track for a weekly gain.
At 1:11 p.m. ET (16:11 GMT), the Dow Jones Industrial Average was up 101 points, or 0.2%. The S&P 500 was down 0.2%, and the Nasdaq Composite fell 0.4%.
Positive Week Despite Friday Drop
Strong corporate earnings have lifted Wall Street this week. The Dow is up 1.7% week-to-date, while the S&P 500 and Nasdaq are both on track for gains of about 1.2%.
Consumer Sentiment and Inflation Data
The preliminary University of Michigan Consumer Sentiment Index for August fell to 58.6 from 61.7 in July, missing forecasts of 62. Concerns over tariff-driven inflation were a key factor.
Inflation expectations also jumped. The one-year outlook rose to 4.9% from 4.5%, and the five-year outlook climbed to 3.9% from 3.4%.
According to Investing.com’s Fed Rate Monitor Tool, the probability of a September rate cut fell to 86% from 92% a day earlier. While a 25-basis-point cut is still expected, hotter inflation expectations could limit the size of future cuts.
Import Prices and Retail Sales
U.S. import prices rose 0.4% in July after a revised 0.1% drop in June, driven by higher consumer goods costs. ING analysts noted that sustained high import prices could either be passed on to consumers, raising inflation, or absorbed by corporate profit margins.
Retail sales increased 0.5% in July, following a revised 0.9% rise in June. Capital Economics analysts said the data shows households are still spending despite tariff-related price pressures. However, a weaker labor market and higher goods prices could weigh on consumer spending in Q3.
Trump-Putin Meeting in Alaska
Later today, President Donald Trump will meet Russian President Vladimir Putin in Alaska to discuss ending the war in Ukraine. Trump said he will not negotiate on Ukraine’s behalf but hopes to bring both sides to the table.
Ukraine fears the talks could result in a frozen conflict, but Trump’s remarks suggest Kyiv will retain control over decisions regarding territorial swaps.
Corporate Highlights
Earnings season is nearly complete, with FactSet reporting that over 80% of S&P 500 companies have posted positive earnings and revenue surprises.
UnitedHealth Group surged after Warren Buffett’s Berkshire Hathaway disclosed a new stake in the company. UnitedHealth shares have fallen 46% this year amid criticism of U.S. healthcare policies.
Berkshire also revealed it sold 20 million Apple shares, reduced its stake in Bank of America, and increased its holdings in homebuilders DR Horton and Lennar.
