NEW YORK, 29 August 2025 – U.S. equity markets pulled back from record highs on Friday as investor enthusiasm was dampened by inflation data showing sticking pressure—especially in the Federal Reserve’s preferred core measure. The S&P 500 slipped 0.3%, edging below the 6,500 mark, while the Nasdaq 100 lost 0.5%.
Inflation Remains Elevated
The Personal Consumption Expenditures (PCE) Price Index, excluding food and energy, held steady at 2.6% year-on-year—matching its pace in June—but still above the Fed’s 2% target. More concerning was the core PCE, which rose to 2.9%, the highest annual reading since February.
Despite overall inflation remaining contained, the elevated core inflation figure—driven largely by rising services costs—continued to challenge the Fed’s ability to lower interest rates soon.
Market Reaction and Forward Outlook
Although markets briefly rolled back rate-cut expectations, most investors still anticipate a 25 basis-point cut in September, buoyed by dovish signals from Fed Chair Jay Powell and emerging signs of labor market cooling.
Tech stocks were among the worst hit during the selloff. Dell fell sharply due to weaker AI server sales, Marvell Technology plunged after disappointing data-center revenue, and Nvidia dropped amid concerns about slowing demand from China. Yet, eight out of eleven sectors in the S&P 500 advanced, with Autodesk soaring 11.2% on upbeat forecasts.
Investors are also watching next week’s nonfarm payrolls report closely—it may offer clearer signals on when the Fed will begin easing policy.
