Dow, S&P 500, Nasdaq rise as PCE inflation data meets expectations

US stocks rose on Friday as investors weighed President Trump's fresh round of punishing tariffs and breathed a relative sigh of relief over an inflation report that came in line with expectations.

The Dow Jones Industrial Average (^DJI) rose roughly 0.6%, leading gains, while the S&P 500 (^GSPC) gained 0.5%. The tech-heavy Nasdaq Composite (^IXIC) ticked 0.2% higher. The gains come after three straight days of losses for the major US gauges.

August's reading of the Personal Consumption Expenditures (PCE) index, which contains the Fed-favored “core” PCE measure of inflation, rose as expected. The “core” PCE price index rose 2.9% year-over-year and 0.2% month-over-month in August, both coming in alongside what economists were expecting even as inflation remained sticky and well above the Fed's 2% target.

Meanwhile, investors are studying Trump's new threat to put a 100% levy on imports of branded drugs. The rate will apply to any pharmaceutical company that isn't already building a manufacturing plant in the US, the president said in a social media post late Thursday, but offered no further details. Shares of drugmakers in Europe and Asia faltered after the move.

Imports of heavy trucks and certain categories of furniture also face new heftier tariffs, Trump said, with the new duties to come into effect on Oct. 1 — less than a week away.

The trade salvo adds fresh uncertainty for markets already grappling with concerns about the sustainability of the AI boom and a high risk of US government shutdown. The S&P 500 is eyeing its first weekly loss this month after a Wall Street slump snapped a record-setting rally.

Meanwhile, Trump signed an order approving a deal to spin off TikTok's US operations from China's ByteDance, though Beijing still needs to sign off on the agreement. But the proposed $14 billion price tag was greeted with surprise on Wall Street, seen as undervaluing a global leader in social media estimated to potentially be worth $40 billion.

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Why odds of a US government shutdown are spiking: Both parties see some upside

The growing sense in Washington is that the latest government funding fight between Republicans and Democrats is shaping up differently, reports Yahoo Finance's Ben Werschkul.

He writes:

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Stocks rise at the open after three days of losses

US stocks rose on Friday at the open.

The Dow Jones Industrial Average (^DJI) rose roughly 0.4%, while the S&P 500 (^GSPC) gained 0.3%. The tech-heavy Nasdaq Composite (^IXIC) also rose 0.15%.

The gains come after three straight days of losses for the major US gauges. This morning, investors are weighing President Trump's latest round of tariffs and the Fed's preferred inflation gauge, which showed prices rising in line with expectations.

Next up, the University of Michigan's final results for its September consumer sentiment survey at 10 am E.T. will provide insight into how Americans are feeling about the economy.
Treasury yields stable as Fed's preferred inflation gauge meets expectations

US Treasury yields were little changed after the release of the Personal Consumption Expenditures (PCE) price index report Friday, which showed “core” inflation easing slightly in August from the prior month as economists expected.

The 30-year yield (^TYX) remained around 4.74% after the report, but was down about 1 basis point from Thursday's close. The 10-year yield (^TNX) was also stable at 4.16%, but also 1 basis point below its level at the end of the prior day's trading session.

Meanwhile, traders are widely expecting the Fed to cut interest rates again at the central bank's October meeting, pricing in roughly 88% chances of a cut as of Friday morning, according to CME Group.
Wayfair, RH stocks fall after President Trump announces tariffs on furniture

Shares of furniture purveyors Wayfair (W) and RH (RH) dropped 3% on Friday ahead of the opening bell as investors weighed the potential impact from the Trump administration's new furniture tariffs.

On Thursday, President Trump announced a new 50% tariff on kitchen cabinets, bathroom vanities, and associated products, and a 30% tariff on upholstered furniture beginning Oct. 1.

“There's going to be gross margin headwinds from tariffs coming,” RH CEO Gary Friedman said on an earnings call on Sept. 11 while the government was still exploring sectoral furniture tariffs. “You just can't raise prices fast enough, and there's only so much room our manufacturing partners have [to absorb costs].”

Friedman has been vocal in saying that smaller companies may not be able to survive a higher tariff environment and that additional tariffs would hurt the industry. RH manufactures approximately half of its upholstered furniture in the US and imports the other half.
PCE index shows prices rising in line with expectations

The US Bureau of Economic Analysis' Personal Consumption Expenditures (PCE) price index report Friday showed the Fed's preferred inflation gauge was in line with expectations for August.

The PCE price index climbed 0.3% in August, a slight uptick from the prior month's 0.2% rise but in line with the 0.3% estimated by economists tracked by Bloomberg. On an annual basis, the index rose 2.7% for the month, above the 2.6% increase seen in August 2024.

The “core” PCE index, which excludes volatile food and energy costs, was up 0.2% in August from the prior month, less than the 0.3% uptick in July. On an annual basis, the core PCE index was unchanged at 2.9%. Those figures were also on par with economists' estimates.
Costco stock dips after earnings top estimates

Costco (COST) stock dipped less than 1% in premarket trading on Friday, as the wholesaler's same-store sales figures didn't impress Wall Street.

In an earnings call on Thursday evening, CFO Gary Millerchip noted that value items and necessities remained strong for the retailer, but customers are being more deliberate about discretionary purchases, Yahoo Finance's Brooke DiPalma reported.

For the quarter, revenue came in at $86.16 billion, compared to expectations of $86.03 billion, while adjusted earnings per share were $5.87, higher than the forecast $5.82, per Bloomberg consensus estimates.

Overall, adjusted same-store sales increased 6.4% and were slightly higher than the expected 6.2% growth, though US same-store sales, which increased 6%, slightly underperformed the Street's estimates.

Read more here.
Trump's 100% pharma tariff plan looks like a reprieve for many drugmakers

President Trump’s plan to place a 100% tariff rate on US imports of patented drugs was greeted with a shrug by many investors, who expect exemptions for pharmas with US plants to soften the blow.

Bloomberg reports:

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Good morning. Here's what's happening today.
Premarket trending tickers: Eli Lilly, Paccar and Intel

Here's a look at some of the top stocks trending in premarket trading:

Eli Lilly (LLY) shares rose 1% in premarket trading on Friday after President Trump said he would impose tariffs on imported drugs.

Intel (INTC) stock rose 3% premarket after news came out that it was seeking investment not only from Apple (AAPL) but also from TSM (TSM).

Paccar (PCAR) stock rose 5% in premarket trading. The US company which supports, designs and manufactures heavy trucks is said to be one of the beneficiaries of President Trump's tariffs on trucks.
Intel's comeback is fueled by the promise of more deals

Dealmaking is the name of the game. Just ask Intel (INTC), writes Yahoo Finance's Hamza Shaban.

He reports in the takeaway from today's Morning Brief:

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Asian drug shares fall in response to Trump's tariff announcement

Pharmaceutical stocks across Asia fell overnight Thursday following Trump's announcement that starting October 1, imports of branded drugs could face tariffs of up to 100%, unless manufacturers have already begun construction of production facilities in the United States.

Reuters reports:

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Oil prices rise following successful Ukrainian strikes on Russian oil infrastructure

Oil prices rose overnight Thursday amid continued Ukrainian militry pressure on Russian production facilities. The commodity is looking to record its largest weekly gain in over three months.

Reuters reports:

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