Dow, S&P 500, Nasdaq muted with Fed rate cut seen as done deal

Consumer sentiment slipped more than expected in August as Americans worried over the effects of Trump’s tariffs.

University of Michigan’s consumer sentiment survey released Friday showed the headline consumer sentiment index came in at 55.4 for the month, a lower reading than the 58 projected by economists polled by Bloomberg and down from 58.2 in August.

The director of the University of Michigan’s consumer surveys, Joanne Hsu, said about 60% of Americans polled provided “unprompted comments about tariffs during interviews, little changed from last month.”

“Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” she said.

Meanwhile, Americans’ long-term inflation expectations for the next five to 10 years rose to 3.9% in September, ahead of the 3.4% projected by economists polled by Bloomberg and the long-term inflation expectations of 3.5% in August. Hsu noted that the reading is still “considerably lower” than the 4.4% in April.

Year-ahead inflation expectations were steady from the previous month and in line with economists’ estimates at 4.8%.

The report comes a day after August’s CPI report showed inflation ticking up in that month, revealing the sting of Trump’s tariffs on consumer prices. Still, a recent slew of jobs data showing a weakening US labor market is expected to dominate the Fed’s decision to cut rates in September, though questions remain about how steep the cut will be and how many additional cuts lie ahead.

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