US market opened lower on Friday following the release of the July inflation report that matched expectations. The recent report kept hopes alive for a September interest rate cut and also raised concerns over the potential impact of tariffs on prices.
The Dow Jones Industrial Average dropped 45.9 points, or 0.10%, to 45,590.96 at the open. The S&P 500 fell 12.6 points, or 0.19%, to 6,489.28, while the Nasdaq Composite declined 74.8 points, or 0.34%, to 21,630.33 at the opening bell.
Inflation in July edged higher, suggesting that President Donald Trump’s tariffs are filtering through the US economy.
The Commerce Department’s report on Friday showed that the personal consumption expenditures (PCE) price index’s core measure, which excludes food and energy, rose at a seasonally adjusted annual rate of 2.9%. This marked a 0.1 percentage point increase from June and the highest annual rate since February, aligning with the Dow Jones consensus forecast.
On a monthly basis, the core PCE index climbed 0.3%, also in line with expectations. The broader all-items index showed an annual rate of 2.6% and a monthly gain of 0.2%, matching consensus projections.
The Fed uses the PCE price index as its primary inflation gauge. While both numbers are monitored, policymakers consider core inflation a more reliable indicator of long-term trends because it excludes volatile food and energy prices.
With the Fed targeting 2% inflation, Friday’s report indicates the economy remains above the central bank’s comfort zone.
Despite this, markets continue to anticipate a resumption of interest rate cuts at the Fed’s next meeting. Fed Governor Christopher Waller reinforced his support for a reduction in a Thursday speech, noting he would consider a larger cut if labor market data continue to weaken.