US stock markets showed mixed performance on Friday, with the Dow Jones Industrial Average (DJI) maintaining an upward trend, while the Nasdaq and S&P 500 declined. The Dow Jones rose by 181.65 points (0.43%) to 42,356.76, the Nasdaq fell by 69.61 points (0.38%) to 18,120.68, and the S&P 500 dropped by 4.69 points (0.08%) to 5,740.68.
The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) price index for August showed a year-over-year increase of 2.2%, below the expected 2.3%. The month-over-month increase was 0.1%, matching expectations. In July, the year-over-year increase was 2.5%.
Excluding food and energy prices, the core PCE price index rose 0.1% month-over-month in August, compared to 0.2% in July, and 2.7% year-over-year, aligning with market expectations. Personal income in August rose 0.2% month-over-month, below the forecast of 0.4%, while personal consumption expenditures increased by 0.1% month-over-month, matching predictions.
Analysts noted that the slight increase in core inflation as well as spending indicates a cooling economy, potentially leading the Federal Reserve to continue cutting interest rates in the coming months. The core PCE price index's unrounded value for August was 0.1304%, lower than the 0.14% cited by Fed Governor Christopher Waller.
Market expectations, as gauged by the CME's FedWatch Tool, show a 45.9% probability of a 25-basis-point rate cut and a 54.1% probability of a 50-basis-point cut by the Fed in November. For December, the tool indicates a 24.0% probability of a cumulative 50-basis-point cut, a 50.2% probability of a 75-basis-point cut, and a 25.8% chance of a 100-basis-point cut.
In other economic news, the US goods trade deficit for August narrowed to $94.3 billion from July's revised $102.8 billion, better than the expected $100.2 billion. The University of Michigan's consumer sentiment index for September rose to a final reading of 70.1, the highest in five months.
Focus Stocks:
Morgan Stanley has raised its capacity expansion forecast for TSMC's CoWoS from 68k monthly to 80k, reflecting strong demand. Nvidia (NVDA) is expected to start small-scale shipments of its B-series GPU in November.
Elon Musk has taken notice of high absenteeism at Tesla's (TSLA) factory in Brandenburg, Germany, which reported an absenteeism rate of 17% in August.
Oracle (ORCL) has selected AMD's (AMD) Instinct MI300X AI accelerators for its cloud infrastructure, marking a significant step for AMD in the AI GPU market.
Apple's (AAPL) iPhone 16 sales reportedly fell short of expectations, despite selling 37 million units in the first weekend, prompting a potential reduction in order volumes.
Microsoft (MSFT) announced a $27 billion investment in Brazil over the next three years to enhance its cloud and AI infrastructure.
Google (GOOGL) has filed a lawsuit with the EU Commission accusing Microsoft of anti-competitive practices in the cloud computing market.
Britain's CMA has decided not to further investigate Amazon's (AMZN) $4 billion investment in AI startup Anthropic.
Meta Platforms' (META) AR glasses, Orion, are projected to enter mass production by 2027, although this timeline is tentative due to technical challenges and vendor selection.
