STOCKS retreated on Wall Street yesterday, pulling back from their latest all-time highs, after fresh inflation data showed prices largely holding steady.
The Dow Jones Industrial Average fell around 0.3 per cent, and the S&P 500 lost about 0.8pc. The tech-heavy Nasdaq Composite led the retreat, down over 1.2pc. Big Tech slumped, with Nvidia declining over 3pc to end the week not long after releasing its highly anticipated earnings report.
A key Fed-watched measure of inflation rose as expected in July, new government data showed yesterday. The ‘core’ Personal Consumption Expenditures index, closely studied by the central bank, rose 0.3pc on a monthly basis and 2.9pc on an annual basis, above the Fed’s 2pc inflation target. Both numbers matched economist expectations, though the annual pace marked the biggest rise since February.
Meanwhile, US consumer sentiment declined to a three-month low as consumers in a University of Michigan survey suggested they expect inflation to surge over the next year.
Yesterday’s data comes after signs of a resilient economy helped lift the S&P 500 and Dow Jones Industrial Average to new all-time highs on Thursday.
Bets that the Fed will ease rates at its September meeting were still riding high Friday, and traders were pricing in an 87pc chance of a quarter-point cut following the PCE reading.
European shares closed lower yesterday, hitting their lowest in over two weeks, weighed down by British banks, while investors assessed economic data in the US and the euro zone.
Natwest dropped 4.8pc, while Barclays and Lloyds shed 2.2pc and 3.4pc, respectively, as a think tank recommended Britain’s government should tax banks on the billions of pounds they receive in interest from the Bank of England on the reserves they hold at the central bank.
This weighed on the broader banks index, down 0.9pc. The index logged its sixth session of declines, its longest losing streak since October 2023.
The pan-European STOXX 600 closed 0.6pc lower, registering its first weekly loss in four, with questions over the independence of the US Federal Reserve and political uncertainty in France weighing on the index. However, it rose for the second consecutive month.
Fed independence has come into focus as President Donald Trump has stepped up his campaign to exert more influence over monetary policy, including his attempt to fire Governor Lisa Cook. Cook filed a lawsuit on Thursday saying Trump has no power to remove her from office.
European technology stocks lost the most, tracking US peers. ASML fell 2.7pc and SAP fell 1.9pc. Conversely, defence stocks were higher with the broader index up 0.4pc.
France’s CAC 40 has shed 3.3pc this week, lagging regional peers, on concerns over a potential collapse of Prime Minister Francois Bayrou’s government next month.
In September, the ECB is expected to keep rates on hold, mirroring its July meeting, after delivering eight rate cuts since mid-2024.
Renewable energy companies Orsted and Vestas Wind closed 3.3pc and 3.1pc lower respectively. The US administration said it was cancelling $679 million in federal funding for 12 offshore wind projects.
Remy Cointreau fell 4.1pc, even as the French spirits maker raised its full-year 2025/26 profit outlook.
Earlier, shares in China notched up their best month in almost a year with a more than 10pc gain on hopes that its economy, especially the tech sector, is picking up.
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