Stocks unsteady on Wall Street amid mixed economy data

NEW YORK (AP) – Stocks moved in midday trading on Wall Street Friday and headed for a weekly loss as investors reassessed a range of economic issues.

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The S&P 500 pared early losses and added 0.3 percent as of 1:03 pm Eastern. The Dow Jones Industrial Average rose 128 points, or 0.4%, to 33,152 and the Nasdaq was down 0.1%. The S&P 500 and Nasdaq are on track for a third straight week of losses.

The markets are going through the weekend and will be closed on Monday for the Christmas holiday.

The government said on Friday that inflation is slowing, although it is still higher than anyone would like to see. The Federal Reserve monitors the rate of inflation in the consumer spending report, which is called the price index, even more than the government measures the price of goods.

Also, consumer spending growth was slower than expected last month, but income was stronger than expected. Markets are under pressure as steady consumer spending and a strong labor market reduce the risk of a recession and increase the risk of higher interest rates from the Fed.

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Helping to support the market was a report showing that US households are reducing their forecasts for an upcoming rate cut. That could help prevent what the Federal Reserve says it’s often eager to avoid: a vicious cycle in which consumers rush to buy things before expected rate hikes, which can only add to inflation.

Consumers are preparing for an increase in prices of 4.4 percent in the coming year, according to the final results of December from the survey of the University of Michigan. This is better than the preliminary figures released earlier this month and the lowest measured in 18 months. Long-term inflation expectations are still within the range of 2.9 percent to 3.1 percent which has been seen for almost the entire last year and a half, at 2.9 percent.

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Treasury yields rose after the reports. The yield on the 10-year Treasury, which affects home prices, rose to 3.74 percent from 3.69 percent late Thursday. The yield on the two-year Treasury, which tends to track the Fed’s actions, rose to 4.32 percent from 4.28 percent.

The latest reports are the last major financial update of the year and investors will soon turn their attention to earnings. Many investors hope to gain a better understanding of consumer behavior through those reports and forecasts, along with a picture of the company’s profitability, said Chris Zaccarelli, chief financial officer at the Independent Advisor Alliance.

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“The stock market is in danger,” he said “if the buyer starts to slow down, the income will decrease, but if the buyer remains strong, the Currency should remain strong and interest rates will rise.”

The Fed has been upfront about its plan to remain firm on raising interest rates to curb inflation, even as inflation slows. The Fed has already raised interest rates to their highest level in 15 years, just after the start of a lean year. The lending rate, the federal funds rate, stands at 4.25 percent to 4.5 percent, and Fed policymakers predict that rates will reach 5 percent to 5.25 percent by the end of 2023.

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Their forecast does not mean that prices will be cut before 2024. The high prices have raised concerns that the economy could go into a deep recession in 2023. High prices have also weighed heavily on commodity prices and other currencies.

Inflation remains a global problem. Japan reported that its core inflation rate, which includes fresh food, rose to 3.7 percent in November, the highest since 1981, as higher oil and other commodity prices added to inflation in the world’s third-largest economy.

Markets in Asia fell and markets in Europe closed mixed.


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