Dow Rises to Record; S&P 500, Nasdaq Slip as Chip Stocks Tumble

Stocks delivered mixed results on Friday as investors processed inflation data that supported expectations for continued interest rate cuts by the Federal Reserve. However, a selloff in semiconductor stocks, led by a drop in Nvidia (NVDA), weighed on the tech sector.

The Dow Jones Industrial Average gained 0.3%, closing at a new record, while the S&P 500 edged down by 0.1%, and the Nasdaq Composite, which had enjoyed a four-day rally, slipped 0.4%. This dip followed a strong performance on Thursday, fueled by a surge in chip stocks and companies with significant ties to China’s economy after news of stimulus measures.

Optimism is growing among investors that the U.S. economy is steering towards a “soft landing,” with expectations that the Federal Reserve will continue to ease interest rates. The central bank recently reduced the federal funds rate for the first time in four years, and the market is poised to close September on a high note after another week of steady gains.

Inflation data also played a key role in Friday’s market movement. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, showed that annual inflation fell to 2.2% in August, down from 2.5% the previous month. This drop brings inflation closer to the Fed’s 2% target, a critical benchmark as the central bank considers further rate cuts. Fed Chair Jerome Powell is set to deliver an eagerly anticipated speech on Monday, which could provide further insights into the Fed’s plans.

Despite this generally positive economic backdrop, Nvidia shares fell 2.1%, contributing to a broader decline among chipmakers, including Marvell Technology (MRVL), Broadcom (AVGO), and KLA Corp. (KLAC). Other major tech companies were mixed, with Apple (AAPL) and Alphabet (GOOGL) posting gains, while Microsoft (MSFT), Meta Platforms (META), and Amazon (AMZN) saw declines.

Meanwhile, U.S.-listed Chinese stocks continued their upward trajectory, buoyed by stimulus measures aimed at reviving China’s economy. The iShares MSCI China ETF (MCHI) climbed 1.8%, pushing its weekly gains to 20%. Key movers included Alibaba Group Holding (BABA), PDD Holdings (PDD), and JD.com (JD), all of which saw solid gains on Friday.

In other notable moves, Bristol-Myers Squibb (BMY) rose 1.6% after receiving FDA approval for a new schizophrenia treatment. On the other hand, Costco (COST) shares dropped 1.8% following an earnings report that missed revenue expectations.

In commodities, gold fell about 1%, trading around $2,670 per ounce, after breaching the $2,700 mark for the first time on Thursday. Oil prices edged up by roughly 1%, while bitcoin rose 1% to $66,000, its highest level in over a month.

Among the biggest decliners on Friday, Dell Technologies (DELL) dropped 5%, despite a strong start to the week after being added to the S&P 500. Despite positive analyst coverage from Deutsche Bank, which issued a “buy” rating based on expected growth in servers, storage products, and commercial PCs, the stock experienced the steepest drop of any S&P 500 company on Friday.