U.S. stocks ended the week slightly lower as midweek gains were erased by a Friday pullback ahead of the holiday weekend. On Thursday, the S&P 500 closed above 6,500 for the first time before dipping back below that level the following day.
The Fed’s preferred inflation gauge ticked higher, reaching its strongest pace in five months. July’s Personal Consumption Expenditures Index showed core inflation running at 2.9% year-over-year, while the broader measure, including food and energy, came in at 2.6%.
The U.S. economy grew more quickly than previously estimated in Q2, with GDP revised to a 3.3% annual pace versus the prior 3.0% estimate, marking a sharp rebound after Q1’s slight contraction. Elevated tariffs continued to influence results by reshaping the balance between imports and domestic production.
Gold extended its rally, climbing for a second straight week and hitting a record high of $3,518 per ounce on Friday afternoon. The metal is now up more than 31% year to date, with much of the week’s gain coming after the inflation report release.
Bond markets reflected growing expectations for a September Fed rate cut. As of Friday, futures pricing signaled an 88.9% chance of a quarter-point move at the September 17 meeting, according to CME Group’s FedWatch tool.
Second-quarter earnings season wrapped up with S&P 500 companies reporting an average 11.7% profit increase from a year earlier, marking the third consecutive quarter of double-digit growth, though slightly below Q1’s 12.9% pace. Communication services led all sectors with a 46% earnings surge.
Housing data underscored lingering softness. New-home sales slipped 0.6% in July, while separate reports pointed to slower home price growth and mortgage rates falling to their lowest level in 10 months.
Looking ahead, Friday’s jobs report will provide fresh insight into labor market momentum. July saw just 73,000 new jobs, and downward revisions shaved 258,000 off prior months’ estimates, leaving April and May gains at only 19,000 and 14,000, respectively.