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U.S. stock markets closed lower on Friday following the Federal Reserve Chairperson’s warning about the sticky inflation rate. Market participants are expecting at least one interest rate hike this year. Economic data came in mixed. All three major stock indexes ended in negative territory. However, the indexes finished last week in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.9% or 464 points to close at 53,885.10, terminating a five-day winning streak. However, 17 components of the 30-stock index ended in positive territory and 13 ended in negative territory. At intraday high, the blue-chip index was up nearly 154 points.
The tech-heavy Nasdaq Composite finished at 26,402.42, slipping 0.5% on weak performance by AI stocks. The major loser of the tech-laden index was PayPal Holdings Inc. (PYPL - Free Report) . The stock price of the company tumbled 12.7% after Bloomberg News reported that a consortium of buyout firm Advent and payment processor Stripe has decided not to acquire the fintech giant. PYPL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 was down 0.3% to finish at 7,711.76. Ten out of 11 sectors of the broad-market index ended in negative territory while one finished in positive territory. The Consumer Staples Select Sector SPDR (XLP), the Health Care Select Sector SPDR (XLV) and the Communication Services Select Sector SPDR (XLC) fell 1.4%, 1.1% and 1.1%, respectively. On the other hand, the Information Technology Select Sector SPDR (XLK) rose 3.2%.
The fear gauge CBOE Volatility Index (VIX) fell 0.6% to 14.43. A total of 15.68 billion shares were traded on Friday, lower than the last 20-session average of 15.80 billion. Decliners outnumbered advancers on the NYSE by a 1.77-to-1 ratio. On the Nasdaq, a 2.19-to-1 ratio favored declining issues.
Fed Chair Warns About Sticky Inflation
In his remarks at the Fed’s annual symposium of economic policies in Jackson Hole, Wyoming, Chairman Kevin Warsh warned about the sticky inflation rate. Warsh said, “While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved.”
Warsh also stated that the inflation rate should decline gradually over a reasonable period toward the central bank’s 2% target rate. Otherwise, the Fed officials need to adjust policy variables to bring down the inflation rate to the central bank’s desired level.
Following the Fed Chair’s remark, the CME Fedwatch interest rate derivative tool shows a 57.5% probability that the central bank will raise the Fed funds rate by 25 basis points to the range of 3.75-4% in September. This probability was 35.4% just a day ago.
Economic Data
University of Michigan reported that the final reading for the consumer sentiment index came in at 51.7% in August, ahead of the consensus estimate of 51%. The final metric for July was 55.2%. The preliminary data for August was 51%.
The subindex for current economic conditions fell to 51.9% in August from 54.8% in July. The subindex for consumer expectations also fell to 51.5% in August from 55.4% in July. The 1-year inflation index fell to 4% in August from 4.2% in July. The long-term 5-year inflation index remained flat sequentially at 3.3% in August.
The Chicago purchasing managers’ index (PMI) for the manufacturing sector came in at 47.1 in August, significantly below the Zacks Consensus Estimate of 58. The reading for July was 57.6.
Weekly Roundup
Wall Street ended last week in the green. The Dow, the S&P 500 and the Nasdaq Composite rose 0.5%, 0.5% and 0.9%, respectively. Better-than-expected second-quarter 2026 earnings results boosted investor’s sentiment.
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Stock Market News for Aug 31, 2026
U.S. stock markets closed lower on Friday following the Federal Reserve Chairperson’s warning about the sticky inflation rate. Market participants are expecting at least one interest rate hike this year. Economic data came in mixed. All three major stock indexes ended in negative territory. However, the indexes finished last week in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.9% or 464 points to close at 53,885.10, terminating a five-day winning streak. However, 17 components of the 30-stock index ended in positive territory and 13 ended in negative territory. At intraday high, the blue-chip index was up nearly 154 points.
The tech-heavy Nasdaq Composite finished at 26,402.42, slipping 0.5% on weak performance by AI stocks. The major loser of the tech-laden index was PayPal Holdings Inc. (PYPL - Free Report) . The stock price of the company tumbled 12.7% after Bloomberg News reported that a consortium of buyout firm Advent and payment processor Stripe has decided not to acquire the fintech giant. PYPL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 was down 0.3% to finish at 7,711.76. Ten out of 11 sectors of the broad-market index ended in negative territory while one finished in positive territory. The Consumer Staples Select Sector SPDR (XLP), the Health Care Select Sector SPDR (XLV) and the Communication Services Select Sector SPDR (XLC) fell 1.4%, 1.1% and 1.1%, respectively. On the other hand, the Information Technology Select Sector SPDR (XLK) rose 3.2%.
The fear gauge CBOE Volatility Index (VIX) fell 0.6% to 14.43. A total of 15.68 billion shares were traded on Friday, lower than the last 20-session average of 15.80 billion. Decliners outnumbered advancers on the NYSE by a 1.77-to-1 ratio. On the Nasdaq, a 2.19-to-1 ratio favored declining issues.
Fed Chair Warns About Sticky Inflation
In his remarks at the Fed’s annual symposium of economic policies in Jackson Hole, Wyoming, Chairman Kevin Warsh warned about the sticky inflation rate. Warsh said, “While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved.”
Warsh also stated that the inflation rate should decline gradually over a reasonable period toward the central bank’s 2% target rate. Otherwise, the Fed officials need to adjust policy variables to bring down the inflation rate to the central bank’s desired level.
Following the Fed Chair’s remark, the CME Fedwatch interest rate derivative tool shows a 57.5% probability that the central bank will raise the Fed funds rate by 25 basis points to the range of 3.75-4% in September. This probability was 35.4% just a day ago.
Economic Data
University of Michigan reported that the final reading for the consumer sentiment index came in at 51.7% in August, ahead of the consensus estimate of 51%. The final metric for July was 55.2%. The preliminary data for August was 51%.
The subindex for current economic conditions fell to 51.9% in August from 54.8% in July. The subindex for consumer expectations also fell to 51.5% in August from 55.4% in July. The 1-year inflation index fell to 4% in August from 4.2% in July. The long-term 5-year inflation index remained flat sequentially at 3.3% in August.
The Chicago purchasing managers’ index (PMI) for the manufacturing sector came in at 47.1 in August, significantly below the Zacks Consensus Estimate of 58. The reading for July was 57.6.
Weekly Roundup
Wall Street ended last week in the green. The Dow, the S&P 500 and the Nasdaq Composite rose 0.5%, 0.5% and 0.9%, respectively. Better-than-expected second-quarter 2026 earnings results boosted investor’s sentiment.