Stock prices fell from Thursday’s close in the third day of losses after indexes hit record highs. Investors may be processing newly announced, industry-focused tariffs set to go live next week.
The large-cap S&P 500 index and the technology-focused Nasdaq Composite declined 0.5%. The Dow Jones Industrial Average, focused on blue-chip stocks, fell 0.4%.
U.S. President Donald Trump announced a handful of new tariff proposals Thursday. This latest round of levies applies to industries rather than countries. The president said imported pharmaceutical drugs, heavy trucks, kitchen and bathroom cabinets and upholstered furniture will be subject to new tariffs as of October 1.
The rapid expansion of the Trump tariff agenda may spook some investors. While the economic repercussions of tariffs so far have been minimal, effects may appear in upcoming inflation reports.
Stock futures for the S&P 500, Nasdaq 100 and Dow Jones are mixed ahead of the market open on Friday. Contracts tied to the S&P 500 are up slightly. Nasdaq 100 futures are down 0.1% and Dow Jones futures are up 0.1%.
Investing & Economic News To Watch Today
Economic news on the calendar for Friday include:
- Personal income and outlays. The Bureau of Economic Analysis, or BEA, releases the personal income and outlays data monthly. Personal income measures income from all sources, including wages, salaries, and government social benefits. The outlays data measures consumer spending, plus interest, fees, and fines. Income and outlay data are key indicators of the financial health of American households. Analysts predict personal income increased by 0.3% in August, down from 0.4% in July. Personal spending growth in August is expected to be 0.5%, consistent with the prior month.
- PCE index. The PCE index is the Fed’s preferred inflation metric. The August PCE index is expected to have increased 0.3% vs. 0.2% in July. A higher-than-expected number could complicate the Fed’s work to stimulate the labor market.
- Consumer sentiment. University of Michigan reports on consumer sentiment monthly. Sentiment influences consumer spending, which accounts for most of the U.S. economy. The final sentiment reading for September is expected to match the previously released 55.4 reading. This marks a 21% sentiment decline compared to September 2024.
Today’s Trading Lesson
Are you comparing against the right benchmark? If your portfolio lost 5% in a period, would that be good or bad? You might say a 5% loss is bad, but that’s not always true. If the broader market dipped 10%, you’d be thrilled with a 5% loss. But when the broader market rises 20%, a 5% loss is terrible.
The point is, it’s tough to evaluate investment performance without comparisons. And to compare effectively, you need the right benchmark.
Benchmarks are usually indexes, like the S&P 500, Wilshire 3000, or Nasdaq 100. Many indexes overlap, but most report slightly different performance based on their constituents. Comparing your positions or entire portfolio against the wrong benchmark can lead to incorrect conclusions about performance.
Use these tips to select and use benchmarks for effective performance evaluation:
- Align asset classes. Use large-cap indexes to evaluate large-cap positions and bond indexes to evaluate bond positions. Go even more specific if you can. Instead of relying on the S&P 500 for large tech stocks, you could opt for a technology-specific index. Sector-specific S&P 500 indexes can be helpful for your more targeted comparisons.
- Align styles. Growth stocks and value stocks behave differently. Where appropriate, choose an index suitable for the characteristics of the stocks you’re measuring.
- Be consistent. Once you identify a benchmark, stick with it. Trend lines are as important as single-period evaluations.
- Consider blended indexes. There are pre-built, blended indexes that can help you evaluate your portfolio as a whole. Morningstar, S&P 500, and Vanguard have target risk indexes that represent specific allocations, such as 60% equity and 40% bonds.
Pay attention to your benchmarks. Only the right measuring stick can fully reveal the strengths and weaknesses in your portfolio.