S&P 500 retreats from record Friday, but heads for 4th winning month in a row: Live updates

Stocks fell on Friday as investors took some money off the table into a long weekend following a new S&P 500 record and solid Nvidia earnings this week. New inflation data showed rising prices was still a risk heading into the new month.

The S&P 500 traded 0.8% lower, though it’s still on pace to see its fourth winning month in a row. The Nasdaq Composite shed 1.3%, while the Dow Jones Industrial Average lost 202 points, or 0.5%.

Core PCE, a key inflation measure watched by the Federal Reserve which excludes the costs of food and energy, increased 2.9% in July, in-line with expectations but an acceleration from the prior month and the highest level since February.

“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. “Today’s in-line PCE Price Index will keep the focus on the jobs market. For now, the odds still favor a September cut.”

Given that equities were already under pressure heading into the PCE print, Baird’s Ross Mayfield believes the day’s pullback has more to do with the market’s recent performance. Stocks are coming off a winning session, with the S&P 500 closing above the 6,500 mark for the first time.

“The PCE number was fine, but there’s a bit of an earnings overhang and maybe just a little profit-taking after hitting an all time high,” Ross Mayfield, investment strategist at Baird, said in an interview with CNBC.

Even with Friday’s losses, the indexes are on track to close out August with solid gains. The 30-stock Dow has logged a more than 3% advance in August, while the S&P 500 has tallied a nearly 2% advance. The tech-heavy Nasdaq has seen an August gain of almost 2%.

The market is hitting new highs into a long weekend and month that has historically been poor for major benchmarks. September was the biggest losing month for the S&P 500, Dow and Nasdaq since 1950, according to The Stock Trader’s Almanac. The S&P 500 averages a 0.7% decline for the month.

Nvidia was among Friday’s key laggards, as shares extended their recent losses with a fall of 3%. That comes after the Wall Street Journal reported that Chinese e-ecommerce giant Alibaba has created a more advanced chip as it looks to fill the gap left by Nvidia running into issues around selling its chips in China. U.S. shares of Alibaba were up 9%.

Nvidia finished slightly lower on Thursday after reporting strong 56% revenue growth for the prior quarter and largely validating the AI trade for investors.

Additionally, tariff concerns have come back to the fore following some troubling commentary. Caterpillar, for example, warned it could see a $1.5 billion to $1.8 billion hit this year from President Donald Trump’s tariffs, sending shares 4% lower. Gap also recently said that tariffs will weigh on profits. Those two updates could be adding to downbeat sentiment Friday, Mayfield told CNBC.