US stocks mostly gained on Friday as investors breathed a relative sigh of relief over an inflation report that came in line with expectations while weighing President Trump's fresh round of punishing tariffs and souring consumer sentiment.

The Dow Jones Industrial Average (^DJI) rose roughly 0.4%, leading gains, while the S&P 500 (^GSPC) gained 0.15%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.16% after three straight days of losses for the major US gauges.

The late morning moves showed stocks pulling back from earlier gains as the latest results of the University of Michigan's consumer sentiment survey found that Americans were more pessimistic about the US economy than expected in September.

Stocks rose earlier in the morning as August's reading of the Personal Consumption Expenditures (PCE) index, which contains the Fed-favored "core" PCE measure of inflation, showed prices rising in line with expectations. The "core" PCE price index rose 2.9% year over year and 0.2% month over month in August, both coming in alongside what economists were expecting, even as inflation remained sticky and well above the Fed's 2% target.

Meanwhile, investors are studying Trump's new threat to put a 100% levy on imports of branded drugs. The rate will apply to any pharmaceutical company that isn't already building a manufacturing plant in the US, the president said in a social media post late Thursday, but offered no further details. Shares of drugmakers in Europe and Asia faltered after the move.

Imports of heavy trucks and certain categories of furniture also face new heftier tariffs, Trump said, with the new duties to come into effect on Oct. 1 — less than a week away.

The trade salvo adds fresh uncertainty for markets already grappling with concerns about the sustainability of the AI boom and a high risk of a US government shutdown. The S&P 500 is eyeing its first weekly loss this month after a Wall Street slump snapped a record-setting rally.

Meanwhile, Trump signed an order approving a deal to spin off TikTok's US operations from China's ByteDance, though Beijing still needs to sign off on the agreement. But the proposed $14 billion price tag was greeted with surprise on Wall Street, seen as undervaluing a global leader in social media estimated to potentially be worth $40 billion.

Final results for the University of Michigan's September consumer sentiment survey released Friday showed sentiment slipped more than expected over the past month.

The index of consumer sentiment fell to 55.1 — lower than the 55.4 projected by economists tracked by Bloomberg as well as the 58.2 in August and 70.3 the prior year.

Preliminary survey results on Sept. 12 had already shown American consumers souring on the economy more than initially expected during the first half of the month, as the director of University of Michigan's consumer surveys, Joanne Hsu, said participants were concerned over the impact of Trump's tariffs.

\\"Interviews this month highlight the fact that consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labor markets,\\" she said Friday. \\"Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances, the highest reading in a year.\\"

Hsu noted some nuances to the final survey results, saying a key exception to American pessimism over the economy was \\"consumers with larger stock holdings,\\" a group whose sentiment was steady in September, \\"while for those with smaller or no holdings, sentiment decreased.\\"

Sentiment also differed by political affiliation, moving down about 9% for independents and 4% for Republicans, but lifting for Democrats.

Meanwhile, a look at Americans' inflation expectations for the month offered a slightly more optimistic perspective on the economy.

Year-ahead inflation expectations dropped to 4.7% in September — less than the 4.8% recorded the prior month, a level that was expected to remain unchanged by economists tracked by Bloomberg. Long-term inflation expectations for the next five to 10 years rose to 3.7% in September from 3.5% in August, but that was less than the 3.9% projected by economists.

The fresh data comes after the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, showed “core” inflation easing slightly in August as projected by economists, helping traders maintain confidence in a rate cut from the Federal Reserve at its October meeting.

The growing sense in Washington is that the latest government funding fight between Republicans and Democrats is shaping up differently, reports Yahoo Finance's Ben Werschkul.

He writes:

Why things may be more likely to end in a shutdown is simple: Not only are both parties OK with a funding stoppage, but some partisans even view the idea of going through with it as an opportunity or political necessity.

Markets, meanwhile, have grown accustomed to tuning out Washington's regular displays of brinksmanship. But Wall Street may turn to the issue in earnest starting Monday, when lawmakers return with less than 48 hours before a partial government shutdown could take effect on Oct. 1 at 12:01 a.m. ET.

The latest example of how the current funding fight is playing out differently — with political pressure seeming to push in the direction of shutdown — came late on Wednesday when President Trump's White House asked federal agencies to consider mass firings as part of their shutdown planning efforts.

It's a way for Trump's team to accomplish previously unrelated goals — those often expressed by the Department of Government Efficiency (DOGE) — in a different manner, with the memo saying firings could be focused on areas \\"not consistent with the president's priorities.\\"

It was also a move intended to increase the pressure on Democrats.

Whether it causes Senate Majority Leader Chuck Schumer and others to blink remains to be seen, but the new threat is one factor Democrats are weighing.

Read more here.

US stocks rose on Friday at the open.

The Dow Jones Industrial Average (^DJI) rose roughly 0.4%, while the S&P 500 (^GSPC) gained 0.3%. The tech-heavy Nasdaq Composite (^IXIC) also rose 0.15%.

The gains come after three straight days of losses for the major US gauges. This morning, investors are weighing President Trump's latest round of tariffs and the Fed's preferred inflation gauge, which showed prices rising in line with expectations.

Next up, the University of Michigan's final results for its September consumer sentiment survey at 10 am E.T. will provide insight into how Americans are feeling about the economy.

US Treasury yields were little changed after the release of the Personal Consumption Expenditures (PCE) price index report Friday, which showed \\"core\\" inflation easing slightly in August from the prior month as economists expected.

The 30-year yield (^TYX) remained around 4.74% after the report, but was down about 1 basis point from Thursday's close. The 10-year yield (^TNX) was also stable at 4.16%, but also 1 basis point below its level at the end of the prior day's trading session.

Meanwhile, traders are widely expecting the Fed to cut interest rates again at the central bank's October meeting, pricing in roughly 88% chances of a cut as of Friday morning, according to CME Group.

Shares of furniture purveyors Wayfair (W) and RH (RH) dropped 3% on Friday ahead of the opening bell as investors weighed the potential impact from the Trump administration's new furniture tariffs.

On Thursday, President Trump announced a new 50% tariff on kitchen cabinets, bathroom vanities, and associated products, and a 30% tariff on upholstered furniture beginning Oct. 1.

\\"There's going to be gross margin headwinds from tariffs coming,\\" RH CEO Gary Friedman said on an earnings call on Sept. 11 while the government was still exploring sectoral furniture tariffs. \\"You just can't raise prices fast enough, and there's only so much room our manufacturing partners have [to absorb costs].\\"

Friedman has been vocal in saying that smaller companies may not be able to survive a higher tariff environment and that additional tariffs would hurt the industry. RH manufactures approximately half of its upholstered furniture in the US and imports the other half.

The US Bureau of Economic Analysis' Personal Consumption Expenditures (PCE) price index report Friday showed the Fed's preferred inflation gauge was in line with expectations for August.

The PCE price index climbed 0.3% in August, a slight uptick from the prior month's 0.2% rise but in line with the 0.3% estimated by economists tracked by Bloomberg. On an annual basis, the index rose 2.7% for the month, above the 2.6% increase seen in August 2024.

The \\"core\\" PCE index, which excludes volatile food and energy costs, was up 0.2% in August from the prior month, less than the 0.3% uptick in July. On an annual basis, the core PCE index was unchanged at 2.9%. Those figures were also on par with economists' estimates.

Costco (COST) stock dipped less than 1% in premarket trading on Friday, as the wholesaler's same-store sales figures didn't impress Wall Street.

In an earnings call on Thursday evening, CFO Gary Millerchip noted that value items and necessities remained strong for the retailer, but customers are being more deliberate about discretionary purchases, Yahoo Finance's Brooke DiPalma reported.

For the quarter, revenue came in at $86.16 billion, compared to expectations of $86.03 billion, while adjusted earnings per share were $5.87, higher than the forecast $5.82, per Bloomberg consensus estimates.

Overall, adjusted same-store sales increased 6.4% and were slightly higher than the expected 6.2% growth, though US same-store sales, which increased 6%, slightly underperformed the Street's estimates.

Read more here.

President Trump’s plan to place a 100% tariff rate on US imports of patented drugs was greeted with a shrug by many investors, who expect exemptions for pharmas with US plants to soften the blow.

Bloomberg reports:

While Trump’s move threatens to double the cost of some imported treatments if construction on US manufacturing plants hasn’t begun by Oct. 1, many big drugmakers already have US plants or are building them.

“All big pharma companies have a US presence and almost all have announced large investments in the years to come,” Vontobel analyst Sibylle Bischofberger Frick said in a note. “Will that prevent their drugs from tariffs? In our view, yes.”

Merck & Co. (MRK), Novo Nordisk A/S (NVO) and Eli Lilly & Co. (LLY) are among firms that have started US builds since 2023, with construction sites in Delaware, North Carolina and Texas, respectively. The projects are aimed at anchoring supply chains inside US borders and supporting blockbuster medicines in cancer, diabetes and immunology.

Others, including Novartis AG (NVS, NOVN.SW) and Sanofi SA (SNY, SAN.PA), have announced large US investments, though it isn’t clear how far those projects have progressed.

Drugmakers’ shares were little changed in Europe on Friday, with a few, such as GSK Plc (GSK, GSK.L), even edging higher. Denmark’s Novo Nordisk (NOVO-B.CO) was an outlier, declining as much as 3.1%.

Read more here.

Economic data: Personal income (August); Personal spending (August) University of Michigan sentiment (September); PCE price index (August); University of Michigan sentiment (September)

Earnings calendar: No notable earnings.

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

Why the US shutdown fight is different this time round

US targets chipmakers with new plan to curb imports: WSJ

Trump plans tariff push with 100% rate on drugs

Intel's comeback is fueled by the promise of more deals

'Daylight robbery': TikTok's $14B price tag stuns investors

Ex-FBI director Comey charged amid Trump retribution push

David Einhorn sounds warning on the AI spending splurge

Oil set for big weekly gain as pressure on Russia intensifies

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

Eli Lilly (LLY) shares rose 1% in premarket trading on Friday after President Trump said he would impose tariffs on imported drugs.

Intel (INTC) stock rose 3% premarket after news came out that it was seeking investment not only from Apple (AAPL) but also from TSM (TSM).

Paccar (PCAR) stock rose 5% in premarket trading. The US company which supports, designs and manufactures heavy trucks is said to be one of the beneficiaries of President Trump's tariffs on trucks.

Dealmaking is the name of the game. Just ask Intel (INTC), writes Yahoo Finance's Hamza Shaban.

He reports in the takeaway from today's Morning Brief:

The unlikely Wall Street comeback kid received another boost this week as a potential deal with Apple (AAPL) has come to light. A legacy chipmaker left behind after the explosion of mobile computing and social platforms and, most recently, in the AI scramble, Intel is now in the earliest stages of an unexpected resurgence.

But it isn't a technological breakthrough that has reversed the company's fortunes. Instead, investors are flocking because of a succession of monumental deals: first from the federal government, then with Nvidia, and now, according to Bloomberg and others, chatter of a partnership with the iPhone maker — around five years after the two companies' very public break-up that even has its own Wikipedia entry. ...

Similar to other marquee American brands — think Boeing or Apple — Intel's importance is bigger than its market cap.

It's hard to quantify what it means for a ticker to hold national security interests — there isn't a line item for contributing to US technological sovereignty, or being a future component in an international AI arms race. Nonetheless, the value is there.

Read more here.

Pharmaceutical stocks across Asia fell overnight Thursday following Trump's announcement that starting October 1, imports of branded drugs could face tariffs of up to 100%, unless manufacturers have already begun construction of production facilities in the United States.

Reuters reports:

Japan's Sumitomo Pharma (DNPUF) tumbling 4.3% and Australia's CSL (CSL.AX) plummeting to a six-year low.

In Japan, Otsuka Holdings (OTSKY) dropped 3.5%, and Daiichi Sankyo (DSNKY) lost 1.6%, although Takeda Pharmaceutical added 0.2% and Shionogi gained 1.3%.

Hong Kong's Hang Seng Biotech Index (HSHKBIO.HK) was down about 1.4%.

India's pharmaceutical stock index fell 2.6%, with declines among all 20 members, even though its industry is dominated by generic drugs excluded from the tariffs. Heavyweight Sun Pharmaceutical Industries was down 3.4%.

Read more here.

Oil prices rose overnight Thursday amid continued Ukrainian militry pressure on Russian production facilities. The commodity is looking to record its largest weekly gain in over three months.

Reuters reports:

Brent futures (BZ=F) climbed 15 cents, or 0.2%, to $69.57 a barrel by 0100 GMT, while U.S. West Texas Intermediate (CL=F) crude futures gained 23 cents, or 0.4%, to $65.21 a barrel.

\\"Gains were supported by ongoing Ukrainian drone strikes targeting Russian oil infrastructure, NATO's warning to Russia it is ready to respond to future violations of its airspace and Russia's move to halt key fuel exports,\\" IG analyst Tony Sycamore said.

Russian Deputy Prime Minister Alexander Novak said on Thursday the country would introduce a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports.

The fall in capacity to refine oil has pushed Moscow close to reducing crude output. Several Russian regions are facing shortages of certain grades of fuel.

Both benchmarks reached their highest levels since August 1 this week, driven by a surprise drop in U.S. weekly crude inventories in addition to Ukraine's attacks on Russia's energy infrastructure.

Read more here.