U.S. stock ended mostly lower on Thursday, making August the worst trading month of 2023 as the Fed’s closely-watch inflation gauge came largely in line with expectations for July. Investors are now awaiting August’s jobs report which is scheduled for release on Friday. The Nasdaq still managed to end in the green but the Dow and the S&P 500 finished in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 0.5% or 168.33 points to finish at 34,721.91 points after climbing nearly 180 points.

The S&P 500 declined 0.2% or 7.21 points, to close at 4,507.66 points. Utilities and Healthcare stocks were the worst performers.

The Health Care Select Sector SPDR (XLV) declined 1.2%, while the Utilities Select Sector SPDR (XLU) fell 1%. The Technology Select Sector SPDR (XLK) gained 0.5%. Six of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq rose 0.1% or 15.66 points to end at 14,034.97 points and record its first straight session of gains.

The fear-gauge CBOE Volatility Index (VIX) was down 2.23% to 13.57.

Markets Volatile after PCE Data Release

Markets remained volatile throughout Thursday as the four-day rally came to a halt following the release of the personal consumption expenditure (PCE) index reading. The PCE reading showed that the cost of goods and services increased a modest 0.2% in July on a month-over-month basis, which was largely in line with the economists’ expectations.

Core PCE, which excludes the volatile food and energy prices and is considered the Fed’s preferred inflation gauge, also came in line with expectations, rising 0.2%.

Year over year, PCE inflation rose 3.3% in July compared to 3% in June, while core PCE inched up to 4.2% from 4.1%.

Stocks have suffered in August as investors have been scrambling for direction. The volatility returned on Thursday as all three major indexes struggled to hold onto their gains on the final trading day of August.

With not much surprise from the PCE inflation reading, the stock market reaction remained largely muted. However, the Nasdaq managed to end in the green, with the tech sector having a better day than others.

Shares of Apple Inc. ((AAPL Quick QuoteAAPL - Free Report) ) and NVIDIA Corporation ((NVDA Quick QuoteNVDA - Free Report) ) gained 0.1% and 0.2%, respectively. NVIDIA has a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Investors will now shift their focus to the non-farm payrolls data that will be released on Friday morning. Market participants are hopeful that the report will hint at a slowing economy will might ultimately make the Fed pause its interest rate hikes.

Economic Data

In other economic data released on Thursday, the Labor Department reported that jobless claims totaled 228,000 for the week ending Aug 26, a decrease of 4,000 from the previous week’s revised level of 232,000. The four-week moving average was 237,500, an increase of 250 from the previous week’s revised average of 237,250.

Continuing claims came in at 1,725,000, an increase of 28,000 from the previous week’s revised level of 1,697,000. The 4-week moving average was 1,704,200 an increase of 8,250 from the previous week's revised average of 1,696,000.

The Labor Department said that personal income increased $45 billion or 0.2% in July, while disposable personal income rose $7.3 billion or less than 0.1%. Personal spending increased 0.8% or $144.6 billion in July.

Monthly Roundup

August proved to be the worst trading month of 2023 although some of the losses were trimmed in the past few sessions wherein all three indexes climbed for four consecutive days. The Dow declined 2.4% for the month.

The S&P 500 finished 1.8% lower in August to record its first monthly loss since February. The Nasdaq also ended 2.2% down for August, its biggest loss this year.