Stock market today: Dow, S&P 500, Nasdaq bounce after 3-day slide, but end week lower

US equities posted modest gains on Friday, with major indices rising 0.4-0.6%, as August's core PCE inflation data met expectations (2.9% YoY, 0.2% MoM), providing some market relief despite remaining above the Fed's target and coinciding with unexpectedly pessimistic consumer sentiment. However, market uncertainty was heightened by President Trump's new threats of 100% tariffs on branded drug imports for non-US manufacturers and additional duties on other goods, which impacted global pharmaceutical stocks and added to existing concerns about the AI boom and potential government shutdown. The proposed $14 billion valuation for TikTok's US operations, seen by Wall Street as a significant undervaluation, further contributed to the complex market outlook.

Analysis

US equity markets (^DJI, ^GSPC, ^IXIC) posted gains between 0.4% and 0.6% on Friday, providing a modest rebound after three consecutive days of losses, though major indices still closed the week down. The primary catalyst for the session's positive sentiment was the August Personal Consumption Expenditures (PCE) report, which came in line with consensus expectations. The Fed-favored "core" PCE index rose 0.2% month-over-month and 2.9% year-over-year, offering some relief to investors despite inflation remaining well above the central bank's 2% target. However, this relief was juxtaposed with several material headwinds. The University of Michigan's consumer sentiment survey revealed an unexpected dip in optimism, signaling potential future weakness in consumption. More significantly, President Trump introduced fresh trade uncertainty by threatening a 100% tariff on imported branded drugs from firms not building US plants and new duties on trucks and furniture, effective October 1. This move, which already pressured European and Asian pharmaceutical stocks, adds to existing market anxieties surrounding the sustainability of the AI-driven rally and the high risk of a US government shutdown. Separately, the proposed $14 billion valuation for TikTok's US operations was met with surprise, viewed by Wall Street as a substantial undervaluation against a potential $40 billion worth, adding another layer of event-driven complexity.

Key Decisions for Investors

• Investors should immediately review exposure to non-US pharmaceutical companies, as the threatened 100% tariff introduces significant and immediate downside risk to firms without a substantial US manufacturing footprint.
• The market's relief rally on in-line inflation data should be treated with caution, as escalating trade tensions, souring consumer sentiment, and the looming risk of a government shutdown present substantial headwinds that may not be fully priced in.
• Monitor developments on the new tariffs targeting drugs, trucks, and furniture, as these politically-driven decisions are likely to create significant sector-specific volatility and potential trading opportunities or risks independent of broader macroeconomic trends.