US stock markets saw broad gains on Friday, providing some relief following a three-day slump fueled by investor concerns over inflation. However, the week ended in a mild loss for all major indexes.
The Dow Jones Industrial Average and the S&P 500 edged up 0.6% for the day, while the tech-heavy Nasdaq Composite rose by 0.4%. Nonetheless, all three indexes ended the week lower by less than 1%.
Inflation data released this week showed prices rising in line with expectations, with the “core” Personal Consumption Expenditures (PCE) index showing a 2.9% annual increase and a 0.2% monthly increase in August. Despite this, inflation remains stubbornly above the Federal Reserve’s 2% target.
Among corporate stocks, software giant Oracle bore notable losses, falling by more than 8% over the week. Other artificial intelligence (AI) stocks followed suit, with investors questioning the sustainability of the AI boom, and the recent $100 billion partnership between Nvidia and OpenAI earning investor skepticism.
The Dow Jones Industrial Average ended the week down 0.2% at 46,247.29, while the S&P 500 closed down 0.3% at 6,643.70. The Nasdaq Composite also fell, dropping 0.7% to 22,484.07.
Additionally, fresh tariffs announced by President Trump on imports of branded drugs, heavy trucks and certain furniture categories further added to the markets’ uncertainty. The new tariffs are set to come into effect on October 1.
In other news, Trump signed an order approving an agreement for TikTok’s U.S operations to split from China’s ByteDance. The proposed $14 billion sale has raised eyebrows amongst Wall Street analysts as it undervalues the social media giant which is estimated to potentially be worth $40 billion.
Overall, the week presented a mixed bag for investors, with inflation fears and tariff threats keeping traders on edge.
Stock markets in the U.S. closed lower for a third consecutive day, hit by a deep decline in Oracle and higher yields. The Dow Jones average fell by 173.96 points or 0.38%, closing at 45,947.32, while the S&P 500 and Nasdaq also dropped by 0.50% to 6,604.72 and 22,384.70 respectively.
Oracle, a key player in the artificial intelligence industry, saw its shares slide by 5%, marking the third day of losses. This latest hit was primarily driven by concerns over the state of the AI industry and the valuation of Oracle. New coverage by Rothschild & Co. Redburn issued a sell rating for Oracle, predicting a 40% pullback, on the basis that the market had vastly overestimated the benefits of the company’s recent AI deals to its core cloud business.
Tesla also saw a drop, with its shares falling 4% this week. The tech sector was shaken by higher yields, causing investors to pull back. The 10-year Treasury yield reached 4.2% after new data showed lower than expected initial claims for unemployment insurance. First time filings for unemployment benefits totalled 218,000 for the week ended September 20, lower than the estimated 235,000.
Investors are also exercising caution in the face of Friday’s personal consumption expenditures price index, and possible developments concerning a government shutdown, which could lead to mass federal firings.
The positive employment data, together with an upward revision in Q2 gross domestic product to 3.8%, could make the Federal Reserve hesitate in cutting rates further, undermining the market’s upward impetus.
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