US stocks retreated from record highs on Friday as Wall Street digested an update on consumer inflation that showed prices firming higher above the Fed's target in July.

The Dow Jones Industrial Average (^DJI) fell around 0.2%, and the S&P 500 (^GSPC) lost 0.6%. The tech-heavy Nasdaq Composite (^IXIC) led the retreat, down over 1.1%. Big Tech slumped, with Nvidia (NVDA) declining over 3% to end the week after releasing its highly anticipated earnings report.

After hitting record highs in August, the S&P 500 and Dow ended the month with gains of 1.4% and 2%, respectively, marking the fourth straight month of gains for those indexes. The Nasdaq also capped August with a 1.6% gain in its fifth straight winning month.

A key 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, above the Fed's 2% inflation target. Both numbers matched economist expectations, though the annual pace marked the biggest rise since February.

Meanwhile, US consumer sentiment declined to a three-month low as consumers in a University of Michigan survey suggested they expect inflation to surge over the next year.

Friday's data comes after signs of a resilient economy helped lift the S&P 500 and Dow Jones Industrial Average to new all-time highs on Thursday.

Bets that the Fed will ease rates at its September meeting were still riding high Friday, and traders were pricing in an 87% chance of a quarter-point cut following the PCE reading.

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

Despite the pullback in stocks on Friday, the major indexes were set for their longest streak of consecutive monthly gains in more than a year.

The tech-heavy Nasdaq Composite was on track to see a 2% bump in August, marking its fifth straight monthly rise, the longest winning streak in nearly a year and a half. For their part, the S&P 500 and the Dow were set for their fourth consecutive month of gains, on track to add 1.6% and 2%, respectively — the longest since September 2024.

And the Russell 2000 (^RUT), which includes small market capitalization companies, eyed a 6% jump for August, on course for its fourth monthly uptick, the longest streak in over four years.

Markets are closed on Monday for the Labor Day holiday.

Nvidia (NVDA) and Big Tech led the Nasdaq Composite (^IXIC) and other indexes lower on Friday in a subdued finish to the month. PCE data released Friday morning, which is closely watched by the Fed, renewed concerns about inflation and the Fed's path forward in balancing prices and the labor market.

The Dow Jones Industrial Average (^DJI) fell around 0.2%, while the S&P 500 (^GSPC) lost 0.6% during the session.

But stocks held on to monthly gains, with the S&P 500 up 1.4%, the Dow up 2%, and the Nasdaq up 1.6%.

The S&P 500 (^GSPC) notched its fourth straight month of gains on Friday to close out August.

As investors head into September, history suggests caution.

Bank of America points out that September has been the market’s weakest month going back nearly a century, with the index falling 56% of the time by an average of 1.17% since 1927.

Seasonal selling pressure often comes from pension funds and mutual funds rebalancing portfolios at the end of the quarter.

Meanwhile, Citadel data shows retail participation is typically the lowest in September. Add to this the fact that September and October are historically the two most volatile months with VIX often spiking toward 20, according to Bloomberg data.

Investors also face a loaded September calendar. The US August jobs report is due to be released next Friday, followed by the latest inflation data the following week.

All eyes will also be on the September FOMC meeting next month, at which investors anticipate policy members will likely cut rates by 25 basis points.

The stock and bond markets will be closed on Monday, Sept. 1, for the Labor Day holiday. Markets will resume normal trading hours on Tuesday.

The New York Stock Exchange and Nasdaq will also observe two remaining holidays this year.

Thanksgiving Day: Thursday, Nov. 27

Christmas Day: Thursday, Dec. 25

Read more about the stock market holidays in 2025.

Yahoo Finance's Laura Bratton reports:

Nvidia (NVDA) and other US chip stocks fell on Friday as a pair of headlines put the sector on track for a losing week after Nvidia's high-profile earnings report on Wednesday garnered a tepid reaction from investors.

Nvidia shares dropped more than 3% Friday and were on pace to lose 2% for the week.

Read more here.

Mergers and acquisitions activity has boomed 35% year-to-date, with August marking the highest month in four years.

London Stock Exchange Group data shows announced M&A activity worldwide totaled $2.7 trillion during the first eight months of 2025.

The analysis shows 43 of those deals were worth more than $10 billion, and four of those were announced during the month of August, including Keurig Dr Pepper’s (KDP) $22.8 billion offer for Dutch coffee company JDE Peet’s.

August deals also included private equity Thoma Bravo’s $12.2 billion offer for human resources software firm Dayforce (DAY) and the Trump administration's 9.9% stake in Intel (INTC).

Technology replaced Industrials as the leading sector so far during 2025, accounting for 18% of global M&A activity by value.

Gold futures (GC=F) notched an intraday high of $3,515.80 per ounce on Friday as PCE inflation data signaled the Fed remained on course to cut interest rates at its September meeting.

Uncertainty stemming from tariffs, weakness in the dollar, and President Trump's attempted ouster of Fed governor Lisa Cook also fueled the rally in gold this week. The precious metal has climbed 4% over the past five days and is on track for its biggest monthly gain in four months.

Silver futures (SI=F) also gained on Friday, rising about 2.7% to $40.8 per ounce. The price of silver has risen 7% over the past month.

Tesla (TSLA) stock sank over 2% on Friday after European sales cratered for the seventh month in a row and Elon Musk accused the Securities and Exchange Commission of \\"overreach\\" in a recent case.

According to data from the European Automobile Manufacturers' Association (ACEA) released Thursday, Tesla electric vehicle registrations in Europe fell 40.2% year over year to just 8,837 units in July. Registration data is used as a proxy for sales.

The decline was more pronounced, considering total EV registrations in Europe and the UK rose 33.6% over the previous year. China's BYD (BYDDY), Volkswagen, and BMW all saw gains.

To try to goose sales in the region, Tesla unveiled a new high-end variant of the Model Y crossover SUV on Friday, which will only be available in Europe for the time being.

Meanwhile, Tesla CEO Elon Musk sought to have an SEC case related to his disclosure of his Twitter stake in 2022 dismissed. Musk said the SEC's enforcement \\"reveals an agency targeting an individual for his protected criticism of government overreach.\\"

In a separate filing, Musk's legal team also asked for the venue of the case to be moved to the Western District of Texas instead of Washington, D.C.

Read more about the new Model Y Performance EV here.

Yahoo Finance's Jennifer Schonberger reports:

A fresh reading on the Federal Reserve’s inflation gauge inched up again, but it isn’t likely to kick the central bank off course to cut rates in September.

“Today’s in-line PCE Price Index will keep the focus on the jobs market. For now, the odds still favor a September cut,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “But the size of that opening is going to depend on whether labor-market weakness continues to look like a bigger risk than rising inflation.”

While Fed officials are keenly watching how much tariffs push up inflation, the rise in “core” prices in July was due to a rise in services prices. “That’s further evidence that tariffs are having minimal impact on goods prices,” said Harry Chambers, assistant economist for Capital Economics.

Chambers noted that the breakdown showed that core goods prices were unchanged on the month. Instead, the rise was driven solely by a 0.36% month-over-month rise in core services prices, which was expected given the strength of services CPI

Read more here.

The US government on Friday revoked prior approvals for South Korean semiconductor firms Samsung (005930.KS) and SK Hynix (000660.KS) to receive chipmaking equipment at their China facilities, further tightening its grip on the chip trade.

The US previously granted waivers to these companies so they could use semiconductor manufacturing equipment and other technologies in their China facilities that would otherwise be banned for import into the country, Bernstein analyst Stacy Rasgon noted in an email Friday.

The stocks were roughly flat Friday.

Yahoo Finance's Jake Conley reports:

Consumer sentiment slipped in August as Americans primarily worried about one aspect of the economy: inflation.

The University of Michigan's consumer sentiment survey released Friday showed year-ahead inflation expectations among Americans climbed to 4.8% in August, up from July's reading of 4.5%. The headline consumer sentiment index came in at 58.2 for the month, down 5.7% from last month and 14.3% from a year ago.

\\"This month’s decrease was visible across groups by age, income, and stock wealth,\\" said Joanne Hsu, director of the survey of consumers.

\\"Moreover, perceptions of many aspects of the economy slipped. Buying conditions for durable goods subsided to their lowest reading in a year, and current personal finances declined 7%, both due to heightened concerns about high prices. Expectations for business conditions and labor markets contracted in August as well.\\"

Read more here.

Nvidia (NVDA) and other US chip stocks fell across the board on Friday after server maker Dell (DELL), a customer of those chipmakers, gave a third quarter earnings outlook below Wall Street's estimates, and Chinese tech giant Alibaba (BABA) reportedly developed a new chip for China.

Nvidia shares fell 3.6%, while Advanced Micro Devices (AMD) dropped 3.5% and Broadcom (AVGO) dropped 4.5%. Micron (MU) shares dropped more than 2%.

The drops came after Dell on Thursday guided for third quarter earnings per share of $2.45, below the $2.55 expected, per LSEG estimates cited by CNBC. Dell accounts for over 2% of Nvidia's revenue on an annualized basis, according to Bloomberg estimates. The server maker also accounts for roughly 1% of Broadcom's revenue, 3.6% of AMD's revenue, and 3.7% of Micron's revenue.

Adding pressure to US chip stocks, namely Nvidia, The Wall Street Journal reported that Alibaba is testing a new chip for AI inferencing. The Journal also highlighted Chinese companies coming up with substitutes for Nvidia's H20 China chip.

China has pressured domestic companies not to use Nvidia's AI chips since Trump and the chipmaker outlined a deal for it to send the US government 15% of its revenue from China chip sales in exchange for export licenses. That deal has not been finalized.

Yahoo Finance's Alexis Keenan reports:

Federal Reserve governor Lisa Cook was targeted by the Trump administration on Thursday in a second criminal referral to the Justice Department, claiming that Cook committed mortgage fraud in connection with three separate mortgage loans.

The referral came hours ahead of a high-stakes emergency hearing scheduled in Washington, D.C., on Friday, where Cook is expected to square off against the administration in an emergency request for a judge to block President Trump from firing her from her post.

If granted, Cook could stay on as a Fed governor while her lawsuit is resolved in the justice system.

Read the full story here.

The three major gauges were set for another month of gains despite a pullback Friday.

The tech-heavy Nasdaq Composite (^IXIC) was set to see a 2% gain in August, marking its fifth straight month of gains, the longest winning streak in a year and a half — showing that even a short-lived tech selloff this month, concerns over an AI bubble, and a tepid response to Nvidia's (NVDA) earnings haven't hampered markets' record breaking rallies. The Nasdaq's last five month streak ended in March 2024.

Meanwhile, the S&P 500 (^GSPC) and the Dow (^DJI) were set for their fourth month of gains, on track to add 1.6% and 2%, respectively — the longest since September 2024.

The Russell 2000 (^RUT), which includes small market capitalization US companies, was also set for a fourth straight month of gains, the longest streak since June 2021. The index eyed a 6% gain for August.

US stocks pulled back from record highs on Friday as Wall Street digested the latest reading of the Federal Reserve's preferred inflation gauge, which showed prices rising above the central bank's 2% inflation target but in line with economists' expectations.

The Dow Jones Industrial Average (^DJI) dipped 0.15%, and the S&P 500 (^GSPC) fell about 0.2%. The tech-heavy Nasdaq Composite (^IXIC) led the retreat, down 0.4%.

But Wall Street stocks are still on track solid monthly gains as they hold their ground in record territory. The S&P 500 eyed a 1.9% gain for August after crossing 6,500 for the first time, while the Dow was set to rise 2.1%. The Nasdaq Composite is on track to notch a 2.5% bump.

PepsiCo Inc. (PEP) is increasing its stake in Celsius Holdings Inc. (CELH) to 11% from 5% previously, the companies announced on Friday.

As part of the $585 million deal, Celsius will acquire PepsiCo's Rockstar brand in the US and Canada (Pepsi will still retain the business internationally). Celsius also recently acquired another energy drink brand, Alani Nu, which will move to Pepsi's distribution network.

Celsius stock popped 6.7% in premarket trading while Pepsi shares were little changed.

The latest reading of the Federal Reserve's preferred inflation gauge showed price increases ticked higher in July but have not seen the full impact of President Trump's tariffs yet.

The \\"core\\" Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month, in line with economists' expectations.

Core prices rose 2.9% in July on an annual basis, above the Fed's 2% inflation target and in line with economists' estimates.

Following the release, markets were pricing in an 85% chance the Fed will cut rates at its September meeting, up from a 63% chance a month ago, per the CME FedWatch Tool.

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