S&P 500 fell 0.64% Friday but still locked in its fourth straight monthly gain

The S&P 500 lost steam Friday, falling 0.64% to close at 6,460.26, but still nailed its fourth straight monthly gain.

The dip came as traders pulled cash off the table before the long weekend, after the index hit a record close above 6,500 on Thursday. This red finish didn’t erase the broader momentum that’s been building for months.

The drop followed new inflation data and came after a week of strong earnings, especially from Nvidia. The Nasdaq Composite dropped 1.15% to 21,455.55, while the Dow Jones Industrial Average shed 92.02 points, or 0.20%, ending at 45,544.88.

According to CNBC, investors trimmed positions heading into September, a month that has a long history of punishing equity bulls.

Nvidia stumbles, Alibaba jumps, and Trump tariffs rattle sentiment

Nvidia fell more than 3%, extending losses despite strong earnings reported Thursday. The company posted 56% revenue growth last quarter, reinforcing its role in the AI-fueled rally.

But a report from the Wall Street Journal said Alibaba developed a more advanced chip, intensifying China’s competition just as Nvidia’s U.S. export issues worsened. Alibaba’s U.S.-listed shares surged about 13%.

The retreat in stocks wasn’t just about chips. Core PCE, the inflation reading the Federal Reserve tracks most closely, rose 2.9% in July. That was in line with estimates, but still marked an uptick from the previous month and the highest since February.

The data wasn’t a surprise, but it added to market jitters. The Fed is still walking the line between growth and inflation, and this latest reading keeps rate path uncertainty alive.

Ross Mayfield, investment strategist at Baird, told CNBC, “The PCE number was fine, but there’s a bit of an earnings overhang and maybe just a little profit-taking after hitting an all-time high.” Stocks had already been under pressure before the inflation release, making the move feel more technical than panic-driven.

The selling didn’t stop the indexes from logging gains for August. The Dow advanced over 3%, the S&P 500 climbed nearly 2%, and the Nasdaq added 1.6%. But traders now face a rough calendar.

Since 1950, September has been the worst-performing month for the S&P 500, Dow, and Nasdaq. Over the last decade, the S&P 500 has averaged a 0.7% decline in September, data from Bespoke and The Stock Trader’s Almanac shows.

Caterpillar warns on Trump’s tariffs as gold spikes above $3,400

On Friday, Caterpillar warned it could lose between $1.5 billion and $1.8 billion this year due to President Donald Trump’s tariff plans, sending shares down more than 3%.

Gap also said tariffs will squeeze its profit outlook. Mayfield said both updates added to the risk-off mood. Trump’s economic policies are raising alarms in sectors exposed to trade friction.

At the same time, gold is ripping. Bank of America boosted its average gold price estimate for the next six years by 6%, to $3,049 per ounce, and set a short-to-medium term target of $4,000/oz. The bank didn’t move its short-term calls, still expecting $3,356 this year and $3,659 in 2026. Gold futures are already up about 31%, now near $3,473.

The bank’s analysts, led by Jason Fairclough, said four things are fueling the rally: the U.S. structural deficit, inflation from deglobalization, Trump’s repeated attacks on the Fed, and rising geopolitical risks. Fairclough wrote, “In our view, conditions that have led to recent strength in gold prices look likely to persist.”

Trump’s threats to undermine the Federal Reserve’s independence are raising red flags. Wall Street is worried the central bank’s ability to steer monetary policy without political interference is at risk. The bulls got their August win. September might not be as forgiving.

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