To The Moon

U.S. stocks ended a three-day losing streak on Friday, but it wasn’t enough to salvage the week. The Dow Jones Industrial Average slipped 0.2%, the $S&P 500(.SPX)$ lost 0.3%, and the $NASDAQ(.IXIC)$ fell 0.7% over the five-day stretch. $NVIDIA(NVDA)$ $Tesla Motors(TSLA)$ $Apple(AAPL)$

Inflation Edges Higher

Inflation

The Fed’s preferred inflation gauge- the Personal Consumption Expenditures Price Index (PCE)- rose for the fourth consecutive month in August. Headline PCE increased 0.3% month-over-month, pushing annual inflation to 2.7%, while core PCE held steady at 2.9%.

The data highlight the Fed’s challenge: inflation remains sticky and above target, but growth is softening and the labor market is losing steam.

Consumers Still Spending, For Now

Consumer spending rose 0.6% in August, outpacing income growth. That momentum is increasingly supported by wealthier households, masking stress among lower, and middle-income consumers.

What It Means for the Fed

Friday’s inflation data complicate the Fed’s next move. With inflation creeping higher, policymakers have less room to maneuver, even as slower job growth argues for caution. Powell’s “no risk-free path” warning earlier this week now looks prescient.

Market Movers

• Hot Stock: Electronic Arts +14.9% (boosted by gaming pipeline optimism)

• Biggest Loser: Costco -2.9% (pressured by cautious consumer sentiment)

• Best Sector: Utilities +1.6%

• Worst Sector: $Consumer Staples Select Sector SPDR Fund(XLP)$

Looking Ahead

• Jobs Report (Friday): The marquee event, assuming the Bureau of Labor Statistics avoids a shutdown-related closure.

• Other Data: ADP employment (Wed), ISM Manufacturing PMI (Wed), ISM Services PMI (Fri).

• Earnings: Carnival (Mon), Nike (Tue), Conagra (Wed).

Conclusion

The Fed is stuck in a balancing act: inflation isn’t cooling enough to allow aggressive cuts, yet growth risks are mounting. For now, markets are muddling through, but the jobs report could tip the scales, either reassuring investors or adding fuel to volatility…