Review & Preview: Spending Splurge

Sep 26, 2025 16:50:00 -0400 by Megan Leonhardt | #Markets #Review & Preview

It’s Getting Complicated. Markets didn’t react much to the latest release of the Fed’s preferred inflation gauge on Friday, with stocks picking up enough steam to break their three-day losing streak.

Still, it wasn’t enough to push the three major indexes into positive territory for the week. The Dow Jones Industrial Average finished the week down 68 points, or 0.2%. The S&P 500 was down 0.3% on the week, while the Nasdaq Composite posted a weekly slide of 0.7%.

The declines come amid an increasingly complicated picture from the economic data. The latest release on Friday showed inflation ticked up for the fourth consecutive month in August. Still, it doesn’t seem like inflation is growing enough to throttle consumer spending—and economic growth and labor measures delivered good news this week.

The Personal Consumption Expenditures Price Index rose 0.3% month over month in August, translating to an annual gain of 2.7%. That’s up from a rate of 2.6% year over year in July.

Core PCE inflation, which excludes food and energy costs, increased 0.2% on the month in August, keeping the annual gain steady for the second month in a row at a rounded 2.9%.

The persistent, albeit slow, uptick in inflation continues to complicate the Federal Reserve’s path forward. Inflation remains above the Fed’s 2% target amid more modest economic growth and weaker employment conditions.

But the fading resilience of the labor market doesn’t seem to be putting a stop to consumer spending. Expenditures rose at a healthy monthly rate of 0.6% in August.

That number doesn’t tell the full story, though. Wealthier households are increasingly making up a larger share of the pie, making spending look a bit rosier than it otherwise would.

“Not all households are weathering the tariff storm equally,” writes Greg Daco, chief economist at EY-Parthenon. “Aggregate consumer spending gives the appearance of broad-based consumer resilience, but a silent majority is increasingly feeling the strain of higher grocery, furniture, auto, and services prices.”

While the Bureau of Economic Analysis revised up second-quarter spending yesterday, Friday’s data show that spending growth has outpaced the income households had coming in throughout the summer. That trend isn’t sustainable forever.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

46,247.29

299.97

0.65%

S&P 500 Index

6,643.70

38.98

0.59%

NASDAQ Composite Index

22,484.07

99.37

0.44%

Market Data as of

The Hot Stock: Electronic Arts +14.9%
The Biggest Loser: Costco -2.9%

Best Sector: Utilities +1.6%
Worst Sector: Consumer Staples +0.2%

Created with Highcharts 9.0.1Friday, Sept. 26Index performanceSource: FactSet

Created with Highcharts 9.0.1Sept. 26-0.4-0.200.20.40.60.81.0%Dow industrialsS&P 500Nasdaq Composite

This Weekend’s Magazine

Photo: Illustration by Nicholas Konrad

The Calendar

Next week, all eyes will be on the U.S. labor market, with the Bureau of Labor Statistics releasing the jobs report on Friday, assuming the BLS is open for business and Congress manages to skirt a government shutdown. Tuesday night is the deadline for a new agreement to fund the federal government.

Other economic data next week include the ADP’s National Employment report and the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index, both released on Wednesday. The ISM also releases its Services PMI on Friday.

Cruiseline-operator Carnival reports earnings on Monday, sneaker-retailer Nike reports on Tuesday, and packaged-foods manufacturer Conagra Brands goes on Wednesday.

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