US markets closed higher on Friday as investors weighed fresh inflation data, weakening consumer sentiment, and mixed corporate developments.
Tesla shares edged up on optimism over its artificial intelligence and robotics expansion, while Toyota issued a recall for its Supra vehicles.
Meanwhile, President Donald Trump signaled progress toward a potential Gaza deal, adding a geopolitical dimension to the day’s news flow.
Tesla shares edge higher on AI optimism Despite European Weakness
Tesla shares rose 3.5% to $438.51 in trading on Friday after analysts raised their price targets, highlighting optimism around the company’s artificial intelligence-driven projects, robotaxi rollout, and humanoid robotics business.
Wedbush analyst Dan Ives lifted his price target to a Street-high of $600 from $500, maintaining a Buy rating.
He noted that Tesla’s AI-led expansion into autonomous driving and robotics could push its valuation to $2 trillion in early 2026 and potentially $3 trillion by year-end.
Deutsche Bank also raised its target to $435 from $345, projecting 461,500 third-quarter vehicle deliveries, ahead of consensus.
This comes as Tesla’s European sales continue to struggle, with August registrations down 23% year-over-year and year-to-date registrations falling 32.6%.
US consumer sentiment slips in September
The University of Michigan’s final Consumer Sentiment Index for September fell to 55.1 from 58.2 in August, a 5.3% monthly decline and a 21.6% drop from a year earlier.
Both the Current Conditions Index and Expectations Index weakened, signaling broad-based consumer unease over inflation and labor market conditions.
Director Joanne Hsu noted that frustration with high prices was a major driver of the decline, with 44% of respondents citing inflation as eroding their finances, the highest share in a year.
Notably, sentiment held steady for households with larger stock holdings but decreased for those with smaller or no holdings.
Inflation gauge shows limited progress
The Commerce Department reported that the core personal consumption expenditures (PCE) price index rose 2.9% in August year-over-year, unchanged from July and in line with expectations.
On a monthly basis, core PCE gained 0.2%. The broader PCE index, including food and energy, advanced 0.3% month-over-month and 2.7% annually.
The figures suggest inflation has eased from its 2022 highs but remains above the Federal Reserve’s 2% target.
Economists noted the data was unsurprising but underscored the challenge for policymakers balancing inflation risks against labor market weakness.
Toyota recalls Supra vehicles over fire risk
Toyota announced a recall of around 1,500 MY2020–2022 Supra vehicles in the United States due to a potential defect in the engine starter.
According to BMW, water intrusion could cause corrosion, increasing the risk of short circuits and, in extreme cases, vehicle fires.
The automaker said dealers would replace the faulty part at no cost, with owners set to be notified by the end of November.
Trump signals Gaza deal possible
President Donald Trump said Friday that “it’s looking like we have a deal on Gaza,” which he suggested could secure the release of hostages and “end the war.”
Speaking before leaving for the Ryder Cup in New York, Trump added, “it’s going to be peace,” without further details.
Israeli Prime Minister Benjamin Netanyahu, meanwhile, criticized Western countries for recognizing Palestinian statehood and called on Hamas to release all hostages.
US markets advance on inflation data
Equity markets gained following the PCE report. The Dow Jones Industrial Average rose nearly 300 points, or 0.6%, while the S&P 500 gained 0.6% and the Nasdaq Composite added 0.4%.
While the inflation figures were largely in line with expectations, investor optimism was tempered by strong jobs data and an upward revision to second-quarter GDP to 3.8%, which could reduce pressure on the Fed to accelerate rate cuts.
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