Wall Street Is At All-Time Highs, But Inflation Sends Warnings: This Week In Markets
U.S. equities reached record highs midweek but lost momentum by Friday due to inflation concerns affecting the Federal Reserve's interest rate decisions. The Core PCE price index rose 2.9% year-over-year in July, complicating rate easing discussions. The U.S. goods trade deficit surged to $103.6 billion, raising concerns over trade policies. Nvidia's quarterly results fell short of expectations, while MongoDB and Snowflake saw significant gains. Investors are cautious as September approaches, historically a poor month for markets, with the July jobs report looming as a key economic indicator.
Despite hitting fresh record highs midweek, U.S. equities lost steam by Friday as inflation indicators complicated the Federal Reserve's path forward on interest rates.
- GLD ETF is trading near record highs. Check live prices here.
The Core Personal Consumption Expenditures price index — the Federal Reserve's preferred measure of underlying inflation — rose 2.9% year-over-year in July, the highest reading in five months.
Just a week earlier, Fed Chair Jerome Powell hinted that easing rates might soon be appropriate. But the new data reintroduces a layer of uncertainty on that timeline, especially as inflation remains above the Fed's 2% target.
Adding to economic headwinds, the U.S. goods trade deficit surged to $103.6 billion in July, up $18.7 billion from June and well above Wall Street forecasts of $89.5 billion. This marks the largest gap since March, when the deficit hit a record $162 billion.
The worsening balance underscores concerns that President Donald Trump's tariff policies may not be delivering the intended improvements to the trade balance.
Nvidia Corp. NVDA — the world's largest publicly traded company — struggled to lift markets despite posting strong quarterly results.
The chipmaker topped Wall Street estimates on both revenue and earnings per share, but its forward guidance came in only modestly above expectations.
For investors used to blockbuster beats and aggressive outlooks from the AI bellwether, which helped drive this year's rally, the update fell short. Shares declined for a third straight week, extending the stock's recent losing streak.
MongoDB Inc. MDB and Snowflake Inc. SNOW were standout performers, rallying 40% and 20% respectively on the back of strong quarterly results and their growing relevance in the artificial intelligence landscape.
Cyclical sectors also extended gains, with Michigan-based automakers notching a positive August.
General Motors Co. GM has climbed nearly 40% from its April lows, marking its second consecutive positive month. Ford Motor Co. F booked a fourth straight monthly gain, while Stellantis N.V. STLA rebounded after sinking to five-year lows in July.
Looking ahead, investors brace for September — historically the worst-performing month for markets. On Friday, Sept. 5, the key macroeconomic event will be the July jobs report, which could prove pivotal for interest rate expectations heading into the Fed's next meeting.
- Christopher Waller Supports 25 Bps September Cut After Dissenting For Same In July: Economist Asks Why Not 50 Bps This Time?
Image created using artificial intelligence via Midjourney.
