U.S. stocks extended losses on Friday morning as a vicious sell-off that has plagued the month continued ahead of the end of the long holiday.
The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each fell 0.5% after struggling for direction at the open. The Nasdaq Technology Composite ( ^IXIC ) fell 0.9%.
US stock and bond markets will be closed on Monday, December 26 for the Christmas holiday. Bond markets will close one hour earlier than normal on Friday at 2:00 PM ET.
The core PCE price index – the Fed’s preferred measure of inflation – rose 5.5% in November and 0.1% annualized from the previous month, according to consensus estimates of economists surveyed by Bloomberg. These numbers showed a slight decrease from readings of 6.1% and 0.3% respectively in October.
Core PCE, which strips out volatile food and energy items, rose 4.7% year-on-year and 0.2% on a monthly basis.
Meanwhile, personal spending stagnated in November and was the weakest print since July.
Investors will also get readings on the University of Michigan Consumer Sentiment Survey and new home sales.
“The Federal Reserve’s preferred measure of inflation continues to fall, which is good news for their most important target, but unfortunately for the market, it also happens as consumers continue to cut back on spending,” the Alliance’s Independent Advisor Investment capital. Officer Chris Zaccarelli said in a statement.
He added: “At this point, the market has backed itself into a corner, as stronger spending and higher growth are indirectly bad for the stock market (as it is likely to trigger an even stronger response from the Fed), while be slower. spending and growth is directly bad for the stock market, because it means lower corporate income.”
After the Fed’s final 2022 policy decision last week, strategists noted that the most surprising data point among officials’ economic forecasts was an upward revision to their baseline PCE expectations of 3.5%. 3.1% before the end of 2023. This suggested that many analysts that the Federal Reserve will need to keep rates at a higher terminal rate until 2023.
“We expect the Fed to revise its forecasts in March, although progress will be slow at first; policymakers seem wary of the experience of the past year and a half, and will want to be sure. those numbers are not slowing down quickly,” Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note. “The market will not wait.”
Friday’s moves followed a wild previous trading day that saw the S&P, Dow, and Nasdaq post losses of 1.4%, 1%, and 2.2%, respectively. Investors were rattled by a warning from chipmaker Micron Technology about the semiconductor industry and a strong job market and consumer spending data that confirmed the prospect of “higher for longer” interest rates.
Oil prices rose on Friday, heading for a weekly high as investors expected Russian crude supplies to taper. This has raised concerns about reduced demandfor transportation fuel in the United States due to a winter storm headed for North America. West Texas Intermediate (WTI) crude futures – the US benchmark – rose 2 percent to $79.
U.S. Treasury yields edged higher, while the U.S. dollar index retreated against a basket of currencies.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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