Updated 2 min read
US stocks hit pause on Friday as Wall Street took stock of the US economy from a lofty, record-setting perch ahead of the Federal Reserve’s highly anticipated decision on interest rates next week.
The Dow Jones Industrial Average (^DJI) edged down over 0.1%, while the S&P 500 (^GSPC) slipped below the flat line. The tech-heavy Nasdaq Composite (^IXIC) inched up 0.1%. All three major indexes rallied to records on Thursday, with the Dow closing above 46,000 for the first time.
Investors have taken in several weeks’ worth of economic data to gain clues on the Fed’s next move. Over the last week, jobs data has shown clear signals of labor market weakness, with just over 20,000 jobs added last month and weekly initial jobless claims surging to a near four-year high.
Meanwhile, inflation remains stubborn, with consumer prices rising last month amid more signs that President Trump’s tariffs are filtering their way into the economy. But investors are betting inflation is tame enough for the Fed to cut next week — and then some.
Traders are pricing in a more than 90% chance of a quarter-point cut when the Fed holds its September meeting, according to CME Group. Beyond that, around 75% are betting the central bank to cut the equivalent of three times before the end of the year.
Read more: The latest on Trump’s tariffs
The lead-up to the Fed’s September meeting in the next few days will likely be quieter. But Friday brings an initial reading of consumer sentiment this month from the University of Michigan. Though most signals point to consumer spending holding steady, Americans are souring on their purchasing power — and on the job market as a whole.
For now, the three major stock indexes are all headed for weekly gains of over 1.4%. The Dow was on track for its first win in three weeks after crossing 46,000 for the first time, while the S&P 500 and Nasdaq Composite are set for their best showing since early August.
LIVE 14 updates
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Consumer sentiment slips as Americans worry over Trump’s tariffs
Consumer sentiment slipped more than expected in August as Americans worried over the effects of Trump’s tariffs.
University of Michigan’s consumer sentiment survey released Friday showed the headline consumer sentiment index came in at 55.4 for the month, a lower reading than the 58 projected by economists polled by Bloomberg and down from 58.2 in August.
The director of the University of Michigan’s consumer surveys, Joanne Hsu, said about 60% of Americans polled provided “unprompted comments about tariffs during interviews, little changed from last month.”
“Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” she said.
Meanwhile, Americans’ long-term inflation expectations for the next five to 10 years rose to 3.9% in September, ahead of the 3.4% projected by economists polled by Bloomberg and the long-term inflation expectations of 3.5% in August. Hsu noted that the reading is still “considerably lower” than the 4.4% in April.
Year-ahead inflation expectations were steady from the previous month and in line with economists’ estimates at 4.8%.
The report comes a day after August’s CPI report showed inflation ticking up in that month, revealing the sting of Trump’s tariffs on consumer prices. Still, a recent slew of jobs data showing a weakening US labor market is expected to dominate the Fed’s decision to cut rates in September, though questions remain about how steep the cut will be and how many additional cuts lie ahead.
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Morgan Stanley forecasts a faster pace of rate cuts through January
Investors are convinced there’s an interest-rate cut coming in September. The debate now is how big wiill it be, and what happens after that?
Morgan Stanley has put down its marker, saying Friday that it expects the Federal Reserve to lower rates four times in a row: at its three remaining meetings this year, then in January. All will be quarter-point moves, the brokerage said, even as some traders start leaning toward a jumbo cut to kick off.
Bloomberg reports:
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Stocks waver at the open, but set for weekly gains
US stocks were muted on Friday at the open as Wall Street looked ahead to the Federal Reserve’s highly anticipated decision on interest rates next week.
The Dow Jones Industrial Average (^DJI) fell more than 0.1%, while the S&P 500 (^GSPC) sank below the flat line. The tech-heavy Nasdaq Composite (^IXIC) edged up 0.1%. The gauges meandered after rallying to records on Thursday, which saw the Dow close above 46,000 for the first time.
The major stock indexes are all headed for weekly gains of over 1.4%, with the Dow set for its first win in three weeks.
Now, investors are looking to the University of Michigan’s survey of consumer sentiment for September — due at 10 a.m. ET — for insight into Americans’ inflation expectations.
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Winklevoss-led Gemini IPO priced at $28 per share
Gemini Space Station, a crypto exchange founded by Tyler and Cameron Winklevoss, is set to go public on Friday to cap a week of IPO activity.
The company priced its initial public offering at $28 per share on the Nasdaq late on Thursday, putting Gemini’s valuation at $3.3 billion. According to Reuters, the IPO was 20 times oversubscribed, indicating strong demand for crypto companies. The stock will begin trading under the ticker GEMI.
Meanwhile, shares of blockchain platform Figure Technology Solutions (FIGR) are set to begin their second day of trading by taking a leg lower. The stock, which opened at $25 per share on Thursday, spiked as much as 48% in initial trading and closed the day 24% higher at $31 per share.
Figure raised $787.5 million in its IPO, valuing the company at $5.3 billion. In an interview with Yahoo Finance’s Brian Sozzi, Figure co-founder Mike Cagney explained why there’s market excitement around crypto and how it’s disrupting financial markets.
Buy now, pay later firm Klarna (KLAR), which debuted on the public markets on Wednesday, was up 2.5% in premarket trading on Friday after a down day on Thursday. The stock closed its first day of trading 16% higher and its IPO raised $1.37 billion.
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RH stock falls after furniture company highlights dire tariff situation
Luxury furniture maker RH (RH) cut its annual outlook on Thursday, warning of the toll tariffs are having on the industry. The stock fell 9% in premarket trading.
“There’s going to be gross margin headwinds from tariffs coming,” CEO Gary Friedman said on the earnings call. “You just can’t raise prices fast enough, and there’s only so much room our manufacturing partners have [to absorb costs].”
Friedman said that tariff uncertainty led the company to delay a new brand extension and its Fall Interiors Sourcebook.
As a result, RH said it expects a $30 million hit to profits in the second half of the year. The company also lowered its full-year revenue growth outlook to 9% to 11% from 10% to 13% previously.
Earnings per share of $2.62 missed Wall Street estimates of $3.25 per share. Revenue also missed: $899 million compared to $905 million estimated.
Year to date, RH stock has faced significant pressure and is down 42%.
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Jobs now matter more than inflation — even as tariff pressures build
Despite notable tariff-fed jumps in prices, the Fed is preparing to cut rates next week. Jerome Powell has signaled it. Markets are pricing it in. And the reason isn’t inflation. It’s jobs, Yahoo Finance’s Allie Canal says in today’s Morning Brief.
Allie reports:
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Wall Street expects rally in riskiest stocks to last 12 months
From Bloomberg:
Russell 2000 futures (RTY=F) were down slightly in premarket trading, but the index is up nearly 20% in the past six months.
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Good morning. Here’s what’s happening today.
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Premarket trending tickers: SMCI, Microsoft, and RH
Here’s a look at some of the top stocks trending in premarket trading:
Super Micro Computer Inc. (SMCI) stock rose 5% before the bell on Friday. The company announced on Thursday that it had begun delivering high-volume Nvidia HGX B300 systems and Nvidia GB300 NVL72 in volume to customers worldwide.
Microsoft (MSFT) stock rose 1% in premarket trading following the news that it had signed a non-binding deal with OpenAI (OPAI.PVT) for new relationship terms that would allow OpenAI to proceed to restructure itself into a for-profit company.
RH (RH) shares fell 10% before the bell after the luxury furniture retailer met Wall Street revenue expectations for its second-quarter results. But next quarter’s revenue guidance was less impressive, coming in 2% below analysts estimates.
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Opendoor has another Wall Street believer
Opendoor (OPEN) shares continue to be in focus after the online real-estate platform somehow nabbed a top executive from Shopify (SHOP) — Kaz Nejatian — to become its new CEO this week.
That has caught the eye of JP Morgan analyst Dae Lee, who is overweight rated on the stock.
Lee says:
I recently caught up with my long-time contact Eric Jackson over at EMJ Capital on Opendoor. He got the stock pushed into meme stock land by becoming very vocal on X about how the company is being severely undervalued.
Worth a watch below.
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Eyes on Comcast after Paramount-Warner Bros. deal chatter
Warner Bros. Discovery (WBD) stock is up another 4% in premarket after its 29% surge on Thursday, following news that Paramount Skydance (PSKY) is preparing a bid for the company.
I wouldn’t rule out a potential bidding war for Warner Bros. Discovery. Good point this morning on this from MoffettNathanson analyst Robert Fishman:
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Adobe stock pops after strong outlook suggests AI payoff
Shares in Adobe (ADBE) stepped higher in premarket after the Photoshop maker gave an upbeat revenue forecast for the quarter through November.
The outlook suggested that Adobe is starting to see a payoff from adding AI features to its software tools.
Bloomberg reported:
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Gold on track for fourth week of consecutive gains
Gold (GC=F) tracked its trajectory for four weeks of consistent gains as rate-cut bet fervour spread from investors to institutions, with bullion-backed ETFs moving heavily toward the haven asset.
Bloomberg reports:
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OpenAI move to for-profit will retain $100 billion for non-profit business arm
Bloomberg reports:
