US stock futures exhibited positive movement on Friday, as investors navigated the implications of new tariffs announced by President Trump and reacted to an inflation report that aligned with market expectations. Futures for the Dow Jones Industrial Average climbed approximately 0.5%, while futures for the S&P 500 gained around 0.4%. The tech-heavy Nasdaq 100 also saw a 0.4% increase, rebounding from a streak of three consecutive days of losses.
The Personal Consumption Expenditures (PCE) index for August, regarded as a key inflation gauge favored by the Federal Reserve, provided some reassurance as it reported increases in line with expectations. The core PCE price index, which excludes volatile food and energy prices, rose 2.9% year-over-year and 0.2% month-over-month, corroborating the forecasts provided by economists.
Simultaneously, investors are closely examining President Trump’s new proposition to impose a 100% tariff on imports of branded pharmaceuticals. The president indicated that this tariff would target any pharmaceutical companies not currently establishing manufacturing operations within the United States, although further specifics were not shared. Following this announcement, shares of pharmaceutical companies in Europe and Asia experienced downward pressure.
In addition to pharmaceuticals, imports of heavy trucks and specific categories of furniture will face substantial new tariffs, with these duties slated to take effect on October 1. The announcement has intensified existing uncertainties in markets that are already jittery due to concerns over the ongoing boom in artificial intelligence, the threat of a potential US government shutdown, and indications of a robust economy that has complicated the case for anticipated Federal Reserve rate cuts.
The S&P 500 is projected to register its first weekly loss this month, adjusting after a previous record-setting rally. In a separate development, Trump approved a plan to spin off TikTok’s US operations from its parent company, China’s ByteDance. However, the proposed price of $14 billion was seen as underwhelming by some investors, given TikTok’s broader estimated worth of around $40 billion.
In the furniture sector, stocks for companies such as Wayfair and RH fell by approximately 3% as markets reacted to the announcement of new tariffs targeting kitchen cabinets, bathroom vanities, and upholstered furniture. RH’s CEO, Gary Friedman, expressed concerns during an earnings call, suggesting that such tariffs could hinder profitability and threaten the survival of smaller businesses in the sector.
The latest PCE index report from the US Bureau of Economic Analysis indicated that the Fed’s preferred inflation gauge for August rose by 0.3%, a minor increase from July’s 0.2% rise, aligning with expectations for a similar increase. On an annual basis, the index moved up by 2.7%, surpassing the previous year’s increase.
In the retail sector, shares of Costco dipped slightly by less than 1% in premarket trading, despite their earnings surpassing expectations. CFO Gary Millerchip noted that while sales of essentials remained robust, there was a noticeable shift in consumer behavior regarding discretionary purchases.
Amid the fallout from Trump’s tariff announcements, many investors remain cautiously optimistic, anticipating exemptions for pharmaceutical manufacturers with US facilities that may mitigate the impact of the proposed tariffs. Meanwhile, certain stocks showed premarket movements, with Eli Lilly’s shares climbing 1%, Intel’s stock up 3% following investment interest from major companies, and Paccar rising 5% as a likely beneficiary of the newly imposed tariffs on heavy trucks.
In international markets, pharmaceutical stocks across Asia also faced declines following the announcement of US tariffs, reflecting the broader impact of the trade measures on global markets. Concurrently, oil prices experienced an uptick due to ongoing military actions in Ukraine targeting Russian oil infrastructure, leading to one of the largest weekly gains for crude prices in over three months.
