U.S. stocks saw a notable rise on Friday as investors responded to President Trump’s latest tariff announcements and found some reassurance in an inflation report that aligned with expectations. The Dow Jones Industrial Average gained approximately 0.6%, leading the way, while the S&P 500 climbed 0.5%. The tech-heavy Nasdaq Composite also experienced a modest increase of 0.2%. This positive momentum followed three consecutive days of losses for the major U.S. indices.
The August report on the Personal Consumption Expenditures (PCE) index, particularly the Fed’s favored “core” PCE measure of inflation, showed a year-over-year rise of 2.9% and a month-over-month increase of 0.2%. These figures were in line with economists’ predictions, although inflation remains persistently above the Federal Reserve’s 2% target.
Simultaneously, investors are closely examining Trump’s unveiled tariff strategy, which includes a 100% levy on imports of branded pharmaceuticals for companies that have not commenced building U.S.-based manufacturing plants. While this announcement has created apprehension, it did not negatively impact investor sentiment significantly; shares of drugmakers in both Europe and Asia saw declines as a result of the news. Additionally, Trump’s announcement included hefty new tariffs on heavy trucks and certain categories of furniture, set to take effect on October 1.
These developments add a layer of uncertainty to markets, which are already navigating concerns about the sustainability of the artificial intelligence boom and the looming risk of a government shutdown in the U.S. The S&P 500 is on track to record its first weekly loss of the month after a previous downturn interrupted a record-setting rally.
In regulatory news, Trump approved a deal to separate TikTok’s U.S. operations from its Chinese parent company, ByteDance, though final approval from Beijing is still needed. The $14 billion deal price has raised eyebrows on Wall Street, considered low for a platform valued around $40 billion.
In trading, U.S. Treasury yields remained relatively stable following the PCE price index report. The 30-year yield was around 4.74%, down slightly from the previous day’s close, while the 10-year yield hovered around 4.16%. Market participants are increasingly pricing in expectations that the Fed may reduce interest rates again during its October meeting, with current estimates suggesting an 88% probability of such a move.
Stocks related to furniture retailers faced activity ahead of the market opening. Wayfair and RH experienced stock drops of about 3% after Trump’s announcement regarding furniture tariffs, which include a 50% tariff on kitchen cabinets and bathroom vanities, as well as a 30% tariff on upholstered furniture. Industry insiders expressed concerns about the impact of these tariffs on margins, with RH’s CEO emphasizing the challenge small businesses face in a higher tariff environment.
Costco’s shares dipped slightly in premarket trading despite exceeding earnings estimates. CFO Gary Millerchip mentioned a shift in consumer behavior, where customers are being more selective with discretionary spending. The wholesaler reported revenue of $86.16 billion and adjusted earnings per share of $5.87, both slightly surpassing market expectations.
While Trump’s proposed pharmaceutical tariffs were anticipated to impact major drug manufacturers, some investors expressed skepticism, perceiving that the presence of U.S. manufacturing plants could mitigate potential impacts. In premarket trading, shares of Eli Lilly rose following the tariff announcement, while Intel saw an uptick as investor interest peaked in its search for new funding opportunities.
Lastly, oil prices surged following successful Ukrainian military strikes on Russian oil infrastructure, positioning the commodity for one of its largest weekly gains in over three months.
