Stocks close higher Friday after in-line inflation data, but S&P 500 snaps 3-week winning streak

The three major indexes snapped losing streaks on Friday.

The Dow rose around 300 points, or 0.7%. The S&P 500 and Nasdaq Composite gained 0.6% and 0.4%, respectively.

— Alex Harring

While the market setup may be shaky heading into October, its recent September momentum may actually indicate there's even more upside in store for next month, according to Jeffrey Hirsch, editor of the Stock Trader's Almanac.

Stocks have surged to new heights this month, with the S&P 500 having scored a new all-time intraday and closing high on Monday. Its gains for the month stand at more than 2%, significantly better than its average September pullback of 4.2% in the last five years.

While stocks have seen three consecutive days of losses amid rising concerns about elevated price levels and the sustainability of the artificial intelligence trade, Hirsch doesn't think that the market will face "Octoberphobia" – a term used to describe the big market declines that have taken place in the month, like the crashes of 1929 and 1987. That's even taking into the fact that fresh all-time highs in September have historically been followed by moderately weaker performance in October.

"Valuations are high, [and] breadth has got some issues, but there's so much money going in," the editor said in an interview with CNBC. "The bullish push, the bullish momentum, is really hard to deny, and it doesn't end early. These tops take a process."

CNBC Pro subscribers can read more here.

— Sean Conlon

Stocks could be most susceptible to a pullback since their April lows over the course of the next few weeks, and that could provide an opportunity for investors, according to Jonathan Krinsky, chief market technician at BTIG.

"An SPX test of the 50 DMA (6446) would represent the largest pullback since April, but would be a modest -3.8% off highs and consistent with what we have seen in 18 of the last 20 years," he said in a note dated Thursday. "Ultimately this should set up an attractive entry point for a rally into year-end, but that's likely lower than current prices."

— Sean Conlon

Investors may have been disappointed in Costco Wholesale's latest earnings report, but many analysts on Wall Street remain bullish.

The warehouse retailer beat on both earnings and revenue for its fiscal fourth quarter, but said same-store sales rose 6.4% — marking two quarters in a row of deceleration. Shares were down nearly 3% Friday.

"We still think COST is well-positioned to maintain its comp momentum due to: A) its expanded hours; B) its new merchandise slated for the holiday season; C) the momentum of its Kirkland signature brands; and D) its opportunities in digital," UBS wrote in a note Friday.

Renewals ticked down marginally, but its membership growth and tier upgrade momentum remains intact, Morgan Stanley noted. It also pointed to its "consistent execution" in membership, core profitability and fee income.

JPMorgan was also unconcerned about the reduced renewal rate and noted that stock headwinds are fading.

"No other major retailer has succeeded in every country it entered, and the club model ranks near auto parts, the top of the best sector in retail, in our view (with COST the clear market leader)," analyst Christopher Horvers said in a note Thursday.

— Michelle Fox

Shares of Electronic Arts surged more than 14% Friday afternoon, following a Wall Street Journal report, citing sources familiar, that said the videogame maker is nearing a deal to go private in what could be the biggest leveraged buyout of all time.

A roughly $50 billion deal could be unveiled as soon as next week from a group of investors that includes private-equity firm Silver Lake and Saudi Arabia's Public Investment Fund, the report said.

— Sarah Min

Small cap stocks are on track to snap their win streak.

Despite Friday's bounce, the Russell 2000 has fallen 0.8% week to date. If that holds, the index would record its first losing week of the last eight.

— Alex Harring

Check out the names making moves in midday trading Friday:

Paccar — The maker of Peterbilt trucks jumped 5% after President Donald Trump slapped a 25% tariff on imported heavy trucks starting Oct. 1.

Boeing - The aircraft maker rallied more than 4% after Turkish Airlines ordered 75 Boeing 787 aircraft and said it completed negotiations to buy 150 737 MAX planes. The deal came as Turkey President Tayyip Erdogan met with President Donald Trump. In addition, the Federal Aviation Administration said it "will allow limited delegation to Boeing for issuing airworthiness certificates for some 737 MAX and 787 airplanes" starting Monday. An airworthiness certificate confirms an aircraft is safe to operate.  

Intel — The chipmaker added 4%. The Wall Street Journal reported that Intel had approached Apple, Taiwan Semiconductor and other companies about investing in the beleaguered company.

Read here for the full list.

— Scott Schnipper

Shares of Paccar jumped about 5% on Friday after President Donald Trump announced that he will impose a 25% tariff on imported heavy trucks beginning Oct. 1.

Trump said in a social media post Thursday that "large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks, and others, will be protected from the onslaught of outside interruptions."

Read more here.

— Spencer Kimball

Stocks could see more gains due to a "supportive" macroeconomic backdrop, even if their prices remain elevated, said Ulrike Hoffmann-Burchardi of UBS Financial Services.

"High valuations historically have not been a clear signal for returns over the next 12 months," the firm's global head of equities wrote on Friday, noting that instead earnings growth and Federal Reserve policy have carried more influence historically.

Hoffmann-Burchardi pointed out that even with high valuations, stocks "performed well" in 1999 and 2021 thanks to strong earnings growth and an accommodative monetary policy stance from the Fed. She also noted that stocks struggled in 2000 and 2022 as earnings momentum "stagnated" and the central bank increased interest rates to slow economic activity.

"The macro backdrop this year remains supportive, and we do not see any negative catalyst on the horizon that could drive a material derating," Hoffmann-Burchardi added.

— Sean Conlon

The S&P 500 could see even more upside heading into the end of the year, according to BMO Capital Markets.

On Friday, the firm increased its 2025 price target on the S&P 500 to 7,000, implying about 6% upside from Thursday's closing price.

"US economic growth and labor market remain relatively resilient. Inflation impact from tariffs winds up being more manageable than current worries. Similarly, fears about tariffs impacting earnings growth never really materialize," Brian Belski, the firm's chief investment strategist, wrote in a note. "The rest of the index continues to pick up the slack from some of the waning mega-cap relative performance, leading to a slightly higher than normal calendar year return."

The move comes after the broad market index reached new highs this week. With that, Belski is going to "chase this bull market," adding that 7,000 "might end up being too low."

"However, markets are rarely linear for long and a blow-off top and eventual settling-in phase at 7,000 is a more prudent and likely result," he continued. "Thus, we gladly accept the unabashedly bullish label undoubtedly coming our way."

— Sean Conlon

Consumer sentiment receded in September, though roughly in line with expectations, according to the latest reading from the University of Michigan.

The survey's index of consumer sentiment registered a 55.1 reading, just below the Dow Jones consensus forecast of 55.4. That marked a 5.3% drop from August and a 21.6% slide from the same period a year ago.

Sentiment declines came "across a broad swath of the population, across groups by age, income, and education, and all five index components," said survey director Joanne Hsu.

"A key exception: sentiment for consumers with larger stock holdings held steady in September, while for those with smaller or no holdings, sentiment decreased," she added.

Politically, Hsu noted that while sentiment fell for independents and Republicans but actually rose for Democrats.

Inflation expectations held fairly steady, with the one-year outlook at 4.7% and the five-year at 3.7%. Current conditions and future expectations indexes also registered declines.

"Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances, the highest reading in a year," Hsu said.

— Jeff Cox

Stocks traded up on Friday morning, reversing course from the prior day's losses.

The S&P 500 advanced 0.4% shortly after the opening bell, while the Nasdaq Composite traded up 0.3%. The Dow Jones Industrial Average also climbed 214 points, or 0.5%. 

— Sean Conlon

Some stocks, including Paccar and Intel, are making big moves before the bell Friday:

• Paccar — The maker of Peterbilt trucks jumped 7% after President Donald Trump said slapped a 25% tariff on imported heavy trucks starting Oct. 1.
• Intel — The chip company added 4.4%. The Wall Street Journal reported Intel has approached Apple, Taiwan Semiconductor and other companies about investing in the beleaguered company.
• Furniture stocks — President Trump said he is imposing a 30% tariff on upholstered furniture, effective Oct. 1, sending shares of furniture retailers lower. RH tumbled nearly 4%, while Wayfair and Williams-Sonoma both fell about 3%.

Read here for the full list of names.

— Michelle Fox

The core personal consumption expenditures price index rose 2.9% year over year in August, in line with a Dow Jones estimate. The report is likely to keep expectations for rate cuts in place.

— Fred Imbert

Costco shares were nearly 1% lower in premarket trading Friday on the heels of the retailer's latest quarterly results.

The company's same-store sales increased 6.4% excluding the impact from changes in gas prices and foreign exchange. That signifies two straight quarter of decelerating same-store sales for the company.

However, its earnings and revenue for the fourth quarter beat analyst estimates. Costco reported $5.87 per share on revenue of $86.16 billion, above the $5.80 per share and $86.06 billion in revenue that analysts surveyed by LSEG were expecting.

— Melissa Repko, Sean Conlon

Shares of artificial intelligence players Oracle and Nvidia were 0.4% and 0.6% lower in the premarket on Friday, respectively.

Oracle closed lower for the third consecutive day Thursday. Traders have been watching the stock all week as a barometer for health of the AI trade.

Nvidia, however, closed higher in the previous day's session after seeing two straight days of losses.

— Sean Conlon

Here are the Dow Jones consensus estimates for the inflation report due out later in the day:

• PCE price index month over month: up 0.3%
• PCE price index year over year: up 2.7%
• Core PCE price index month over month: up 0.2%
• Core PCE price index year over year: up 2.9%

— Fred Imbert

Costco and Concentrix were among the companies moving after Thursday's close.

• Shares of Costco dipped about 0.9% after the warehouse retailer reported fiscal fourth-quarter earnings and revenue that beat analysts' estimates, supported by double-digit gains in both membership income and its e-commerce business. Costco earned $5.87 per share on revenue of $86.16 billion, while analysts polled by LSEG expected earnings of $5.80 per share on revenue of $86.06 billion.
• Shares of Concentrix plunged nearly 22% in after-hours trading. The technology and services company missed earnings expectations and lowered its forecast. The company earned $2.78 per share after adjustments, while analysts polled by LSEG expected $2.87 per share. Revenue of $2.48 billion exceeded the consensus view of $2.46 billion. Concentrix boosted its quarterly dividend by 8.2% to 36 cents per share.

— Pia Singh

Markets are still pricing in two more rate cuts this year, but the possibility of just one more rate cut isn't necessarily bad news, according to Fundstrat head of research Tom Lee.

If the Federal Reserve decides to only implement one rate cut by the end of 2025, Lee told CNBC on Thursday that he thinks "markets would interpret that in a good way, in the sense that they'd rather see the fed cutting into strong economy rather than weak."

Lee's comments come after market participants slightly dialed back their expectations of a quarter-point rate cut from the Fed after seeing fewer-than-expected initial jobless claims on Thursday.

"We know that the Fed was lagging in it's easing because of that imputed shelter inflation, but the reality is they should have been easing sooner ... and so I think that we have to be careful," Lee said. When the Feds talking about that imputed effect, it doesn't mean we have to start a new hiking cycle just because it takes a while to show up. And I think that's why markets are going to see through that."

— Pia Singh

Shortly after 6 p.m. ET on Thursday, futures tied to the S&P 500 and Nasdaq-100 futures each rose less than 0.1%. Futures tied to the Dow Jones Industrial Average ticked higher by 16 points, or less than 0.1%.

— Pia Singh