Stocks retreated on Friday, as market participants cashed in on some of their gains from the previous session's strength. Outlooks were also impacted by a hotter-than-expected inflation reading, signaling that uncertainty surrounding the near- and long-term effects of President Donald Trump's tariffs will continue into the new month.
The Dow Jones Industrial Average (NYSE: DIA) sank about 90 points on Friday to settle at 45,544.88, while the S&P 500 (NYSE: SPY) fell 0.6% to close at 6,460.26, dropping below the 6,500 threshold it crossed in the previous session. The tech-heavy Nasdaq Composite (NASDAQ: QQQ) also declined over 1.1% to end the day at 21,455.55.
Maintaining the broader market unease, core personal consumption expenditures -- a key inflation gauge tracked by the Federal Reserve that excludes food and energy price changes -- increased by 2.9% annually in July, coming in at the highest level since February even as the gain was in-line with economist estimates. On a monthly basis, core PCE rose 0.3% in July, while headline PCE came in at 2.6% and 0.2%, respectively, all also matching expectations.
"The Fed opened the door to rate cuts, but the size of that opening is going to depend on whether labor-market weakness continues to look like a bigger risk than rising inflation," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, in a statement following the report. "Today's in-line PCE Price Index will keep the focus on the jobs market. For now, the odds still favor a September cut."
Consumer sentiment, meanwhile, fell in August as many Americans grew more concerned about higher prices, according to a University of Michigan survey published Friday. Headline sentiment showed a reading of 58.2, falling about 6% below July's reading and 14% from August 2024.
Inflation outlooks also rose for both the one- and five-year horizons to 4.8% and 3.5%, respectively.
"Perceptions of many aspects of the economy slipped," said Joanne Hsu, director of the Surveys of Consumers, in a statement. "Buying conditions for durable goods subsided to their lowest reading in a year, and current personal finances declined 7%, both due to heightened concerns about high prices."
On the earnings front, shares of Marvell Technology (NASDAQ: MRVL) dropped 15% on Friday after revenue for the chipmaker's key data center unit missed expectations in its second-quarter and its forward guidance for overall third-quarter revenue disappointed analysts. The company estimates its current-quarter revenue will be about $2.06 billion, plus or minus 5%.
During the company's earnings call, CEO Matt Murphy told analyst that Marvell expects "overall data center revenue in Q3 to be flat sequentially," due to choppy growth in its custom AI business, and expects the fourth-quarter to be "substantially stronger."
Affirm (NASDAQ: AFRM) shares popped 10% on Friday after the buy now, pay later loan servicer topped expectations on top and bottom lines for its fiscal fourth-quarter. It's earnings of $0.20 per share were nearly double what Wall Street had called for and its revenue grew 33% year-over-year to $876 million.
CEO Max Levchin wrote in a letter to shareholders that the company expanded its network of merchants and increased transaction frequency with the introduction of direct-to-consumer products, including its Affirm Card, throughout fiscal 2025. Moreover, the company emphasized "excellent credit performance," putting Affirm on track to "achieve operating income profitability in FQ4'25 -- right on the schedule we committed to a year ago," Levchin said.