US stocks pulled back from record highs before the bell on Friday as Wall Street digested an update on consumer inflation that will feed into expectations for interest-rate cuts.

Futures on the Dow Jones Industrial Average (YM=F) and the S&P 500 (ES=F) both fell about 0.3%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led the retreat, down 0.4%.

A key Fed-watched measure of inflation rose as expected in July, new government data showed Friday. The "core" Personal Consumption Expenditures index, closely studied by the central bank, rose 0.3% on a monthly basis and 2.9% on an annual basis. Both numbers matched economist expectations.

The Fed-favored data comes after signs of a resilient economy helped lift the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) to new all-time highs on Thursday.

Bets that the Fed will ease at its September meeting have risen since Chair Jerome Powell opened the door at Jackson Hole, with traders now pricing in an 85% chance of a quarter-point cut. On Thursday, Governor Christopher Waller said he "fully expects" more easing to follow in coming months amid cracks in the labor market.

The inflation data caps a whirlwind week for markets gripped by Nvidia (NVDA) earnings and President Trump's effort to oust its governor Lisa Cook, which took a new turn. On Friday, a judge is expected to rule on a bid from Cook for a temporary restraining order.

But Wall Street stocks are still on track for small weekly wins, with more solid monthly gains in sight as they hold their ground in record territory. The S&P 500 eyed a 2.6% gain for August after crossing 6,500 for the first time, while the Dow was poised for a rise of about 3.5%. Meanwhile, the Nasdaq Composite (^IXIC) is looking at a 2.8% bump for the month.

Markets are closed Monday for the Labor Day holiday.

An additional tariff warning and clash with Norway pushed Caterpillar (CAT) shares nearly 3% lower on Friday morning.

On Thursday, the construction machinery maker stated it expects to see a greater hit from tariffs this year than previously thought. The company said it anticipates a tariff hit of $1.5 billion to $1.8 billion this year, above its prior forecast of up to $1.5 billion, which the company issued with its earnings release on Aug. 5.

It expects tariff costs of $600 million for the third quarter, up from a prior forecast of up to $500 million.

Caterpillar stock is also under pressure after Norway's $2 trillion sovereign wealth fund, the world's largest, said on Monday it sold all its shares in the company. The fund's Council on Ethics flagged the company's supply of bulldozers in Israel that are used in the occupation of Gaza and the West Bank.

Norway's prime minister tried to defuse the controversy after Trump ally Sen. Lindsey Graham called the decision \\"offensive\\" and suggested that the US should impose additional tariffs on Norway.

Yahoo Finance's Emma Ockerman reports:

The de minimis exemption allowed millions of shipments into the US each day duty-free if they were valued at or below $800.

But President Trump announced in late July that he would eliminate the policy, effective Friday. That decision, which sent direct-to-consumer companies and small businesses scrambling, subjects smaller imported parcels to tariffs moving forward, though gifts of less than $100 between individuals will not be taxed.

Depending on their country of origin, packages will now face levies of 10% to 50%. Carriers utilizing the international postal network can opt for a flat fee of $80 to $200 per package for the next six months, according to Trump’s announcement, though carriers are largely choosing to use the country-specific reciprocal tariff rates, said Angela Lewis, global head of customs at the logistics company Flexport.

Whether or not to pass that cost along to the consumer or shift strategies is up to companies.

“I do think retailers are going to have the advantage here — a company that does a mix of having stores or even just warehouses in the US where they do fulfillment from, versus a pure e-commerce, direct-to-consumer company,” Lewis said. “You’re going to have some small businesses that aren’t going to be able to handle this. The cost will be too much, given their margins today.”

Read more here.

What looks like a client bottleneck is actually an industry chokehold, according to Yahoo Finance's Hamza Shaban.

He reports in today's Morning Brief:

Sales to Nvidia's two largest direct customers last quarter represented nearly 40% of total revenue in its data center business, the heart of its operation. The next four biggest customers accounted for 46% of the unit's revenue, highlighting the symbiotic relationship between Nvidia and the major tech platforms that sit downstream of its chip supply and feed its coffers.

But it also reflects the delicate, untested nature of the AI ecosystem.

It's not hard to understand why relying on a handful of clients puts your revenue stability at risk. Should their interests change or spending waver, there goes a big chunk of your payday. ...

But Nvidia isn't just some humble startup with a big Silicon Valley client. On the contrary, the superiority of its products means those customers need Nvidia just as Nvidia needs them. It's no accident the chipmaker presides over Wall Street — and investor portfolios — as the most valuable name.

Read more here.

Economic data: PCE inflation (July); University of Michigan consumer sentiment, (August final reading); wholesale inventories (July preliminary); MNI Chicago PMI, (August)

Earnings: Alibaba (BABA)

Here are some of the biggest stories you may have missed overnight and early this morning:

Nvidia's Big Tech clients act like a chokehold

Packages under $800 have avoided tariffs for years. Not anymore.

Trump's tariffs force countries to choose between US or China

Brazil moves to retaliate against Trump tariffs

Stock bulls brace for seasonal turbulence to kick in

Marvell stock slumps as outlook stokes AI chip worries

Alibaba's AI sales help offset food-war hit to profit

Fed's Cook flags 'clerical error' is behind mortgage flap

China's Xi rallies security bloc to rival US-led world order

Here's a look at some of the top stocks trending in premarket trading:

Dell Technologies (DELL) stock fell 6% in premarket trading as a as a gloomy quarterly profit forecast and weaker-than-expected second-quarter margin rate overshadowed upbeat full-year estimates.

Affirm (AFRM) shares soared 15% before the bell after the company turned a profit in its fourth quarter fiscal earnings and exceeded both earnings and revenue estimates.

Alibaba (BABA) stock rose more than 2% before the bell on Friday after reporting a surge in revenue from China’s AI boom, helping offset a surprise drop in profit tied to a worsening battle with Meituan (3690.HK, MPNGY) and JD.com Inc. (JD) in internet commerce.

Marvell Technology (MRVL) stock tumbled almost 13% in Friday's premarket trading after the chipmaker's forecast for data-center-related demand fell short of high expectations.

Wall Street has been betting that cloud giants such as Microsoft (MSFT) and Amazon (AMZN) would clamor for chips customized for AI workloads.

Reuters reports:

Investor expectations for AI-focused chipmakers have been elevated, but recent results have shown signs of a cooling market. Nvidia's (NVDA) latest earnings beat forecasts, but its data center growth slowed and shares fell post-report. Peer Broadcom (AVGO) has yet to report.

Marvell's reliance on so-called custom application-specific integrated circuits exposes it to customer inventory-led swings in demand.

CEO Matthew Murphy said on a post-earnings call on Thursday that data center revenue in the third quarter will be flat on a sequential basis, but did not elaborate on the source of the weakness.

Murphy said \\"lumpiness\\" was normal when large cloud compute providers build out infrastructure.

\\"We aren't surprised at lumpiness, but we are surprised that the ASIC (chips business) full year (revenue) continues to fall,\\" Morgan Stanley analysts said.

Read more here.

Christopher Waller has signaled he wants the Federal Reserve to start lower interest rates with a quarter-point cut in September, with more easing to follow in the months after.

The Fed governor stepped up his call to reduce short-term borrowing costs as President Trump ramps up pressure on the central bank in a push for rate cuts. Waller is said to be under consideration by Trump to replace Jerome Powell when the Fed chair likely steps down next year.

Reuters reports:

\\"While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy,\\" Waller told the Economic Club of Miami on Thursday.

Waller said he did not think the Fed would need to cut rates more than a quarter point next month, though he said that view could change if the Labor Department's August jobs report, due out next Friday, points to a substantially weakening economy, and inflation remains well-contained.

However, he said \\"the time has come to ease monetary policy and move it to a more neutral stance,\\" which he said was around 3%, some 1.25 to 1.50 percent points below the current policy rate range of 4.25%-4.50%.

\\"I don't believe that policy has fallen substantially behind the curve, but one way to signal that I don't intend to allow that happen is to talk about where we go after September,\\" he said. \\"As I stand here today, I anticipate additional cuts over the next three to six months, and the pace of rate cuts will be driven by the incoming data.\\"

Read more here.

Chinese stocks capped another strong week of gains, intensifying a debate over the fate of a rally that’s defied the nation’s economic troubles to add $1.3 trillion in market value just this month.

Bloomberg reports:

Turnover for the onshore market climbed to a record this month as the benchmark CSI 300 Index (000300.SS) rose for nine of the past 10 weeks. That’s despite words of caution from Chinese state media and moves by some brokerages and fund managers to cool things down.

Bullish investors are expressing confidence that authorities will keep sentiment supported before the Sept. 3 military parade, which is set to mark the 80th anniversary of the end of World War II. China has a history of propping up its stock market ahead of major political events to project an image of stability. Bears, meanwhile, are pointing to overstretched technical indicators and high margin-financing levels.

“Animal spirits have burst out in China’s market, with traders piling into everything from chips to Labubu,” said Hebe Chen, an analyst at Vantage Markets in Melbourne. “The upcoming parade is fanning the frenzy, acting as a psychological safety net much like Chinese New Year or National Day, when authorities are expected to keep skies — and sentiment — clear.”

Read more here.

Gold (GC=F) has seen consecutive weeks of gains to push back towards records set in April. Fears around the Fed's independence and the upcoming inflationary report have made the precious metal an attractive prospect to investors seeking stability.

Bloomberg reports:

Bullion was steady early Friday in Asia at around $3,415 an ounce, after data on Thursday showed the US economy expanded faster than expected. The figures raised concerns about inflation ahead of Friday’s US personal consumption print, which is forecast to accelerate. That could limit the Federal Reserve’s ability to cut rates — a scenario that would typically pose a headwind for gold, as it doesn’t pay interest.

Traders were also weighing comments on Thursday from Fed Governor Christopher Waller — a key contender to succeed Jerome Powell as Fed Chair next year — who said he would support a quarter-percentage point reduction in September and anticipates additional cuts over the next three to six months.

Swaps markets see around an 85% chance of a rate cut next month, though beyond September there’s a high degree of uncertainty over how inflation and the US labor market will evolve as the impact of President Donald Trump’s tariffs feed through to the economy.

Read more here.