US equity markets opened lower on Friday evening Beijing time as investors engaged in profit-taking ahead of the long weekend, following the S&P 500's record high and NVIDIA's solid earnings report this week. July core inflation climbed to 2.9%, indicating that rising prices continue to pose risks for US equities.

The Dow Jones Industrial Average fell 62.30 points or 0.14% to 45,574.60; the Nasdaq dropped 80.54 points or 0.37% to 21,624.62; and the S&P 500 declined 12.19 points or 0.19% to 6,489.67.

US markets will be closed Monday (September 1) due to the Labor Day holiday.

Thursday saw US stocks close higher, with the S&P 500 breaking through the 6,500 level for the first time, while the Nasdaq Composite gained 0.5% and the Dow Jones reached a record high with a 0.2% increase.

NVIDIA's better-than-expected quarterly results boosted investor confidence in the AI sector's health. Although the earnings initially sparked concerns about its data center business and current quarter revenue only slightly exceeded expectations, the report lifted semiconductor peers that had declined in early trading.

Tom Lee, co-founder and head of research at Fundstrat Global Advisors, commented: "Anyone trying to sound the alarm on the AI boom is underestimating the speed of technology penetration growth. We may still be in the first inning or first phase of the AI cycle."

Friday marked the final trading day of August, with the Dow up 3.41% month-to-date through Thursday's close, the Nasdaq gaining 2.76%, and the S&P 500 rising 2.56%.

NVIDIA shares continued their recent decline, falling approximately 1%. Caterpillar stock dropped after the company warned that tariffs could result in $1.5-1.8 billion in losses this year. Dell Technologies provided weak guidance for the current quarter.

Friday brought the highly anticipated Personal Consumption Expenditures (PCE) price index report, showing US core inflation for July rose to 2.9% as expected.

**US July Core Inflation Rises to 2.9% as Anticipated**

The Federal Reserve's preferred inflation gauge showed a modest increase in US inflation for July, indicating ongoing price pressure impacts on the American economy.

The Commerce Department reported Friday that the core PCE price index, excluding food and energy costs, reached 2.9% on a seasonally-adjusted annual basis, up 0.1 percentage point from June and matching Dow Jones consensus forecasts.

On a monthly basis, the core PCE index increased 0.3%, also meeting expectations. The headline index showed an annual rate of 2.6% with a monthly gain of 0.2%, both aligning with consensus estimates.

The Fed uses the PCE price index as its primary forecasting tool. While monitoring both metrics, policymakers view core inflation as a better reflection of long-term trends since it excludes volatile gasoline and food prices.

With the Fed targeting 2% inflation, Friday's report shows the economy remains above the central bank's comfort zone.

Nevertheless, markets expect the Fed to continue lowering the benchmark rate at next month's policy meeting. Fed Governor Christopher Waller reiterated support for rate cuts in Thursday remarks, stating he would consider larger moves if labor market data continues weakening.

Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, noted: "The Fed has opened the door to rate cuts, but how wide depends on whether labor market weakness continues to pose greater risk than rising inflation. Today's in-line PCE data will keep focus on the jobs market. Markets still lean toward a September rate cut."

Alongside inflation developments, consumer spending grew 0.5% monthly, meeting expectations and showing resilience despite rising prices. Personal income accelerated 0.4%, bringing all report data in line with consensus forecasts.

Energy goods and services prices fell 2.7% year-over-year, restraining overall inflation gains. Food prices rose 1.9% annually. The balance heavily favored services prices, jumping 3.6%, while goods prices increased only 0.5%.

Monthly, energy prices declined 1.1% and food prices dropped 0.1%. Services prices rose 0.3%, essentially comprising the entire monthly gain as goods prices fell 0.1%.

Additional data showed US July imports increased 7.1% from June's $262.9 billion to $281.5 billion. July exports declined 0.1% from June's $178.1 billion to $178.0 billion. The preliminary goods trade deficit widened from June's $84.9 billion to $103.6 billion.

Thirty economists' preliminary trade deficit forecasts ranged from $73.6 billion to $105.0 billion, with a median of $90.2 billion.

July wholesale inventories rose 0.2% to $908.4 billion. July retail inventories increased 0.2% to $809.3 billion.

**Individual Stock Focus**

Tesla officially launched the new Model Y Performance on Friday, with the vehicle now available in European markets.

Recent court documents reveal the UK government took broader measures than publicly known to pressure Apple into providing "backdoor" access to private customer data.

Google's Vice President of People Analytics and Performance Brian Welle stated the company eliminated one-third of small team managers over the past year to improve operational efficiency.

Caterpillar warned that tariffs could cause $1.5-1.8 billion in losses this year.

Dell's third-quarter profit forecast missed expectations.

Marvell Technology's third-quarter revenue guidance fell short of market expectations.

Ulta Beauty raised its annual performance outlook.