[Economics] Stocks Finish Higher as Investors Digest Latest Economic Data

[FazzNoth]

Stocks closed higher Friday, capping off a rough week of trading, after November inflation data showed signs of a moderation in prices that are still historically high.

The Dow Jones Industrial Average climbed 177 points, or 0.5%, while the S&P 500 gained 0.6% and the Nasdaq Composite closed 0.2% higher.

For the week, the Dow gained 0.9%, while the S&P 500 fell 0.2% and the Nasdaq closed 1.9% lower.

Core PCE climbed 4.7% in November from a year ago, according to the Bureau of Economic Analysis, in line with economists’ expectations. Core PCE climbed 5% in October.

Personal income increased 0.4% and personal consumption expenditures, or spending, climbed 0.1% month over month. Both of those increases were lower than the previous month's climbs.

“The Federal Reserve’s preferred measure of inflation continues to go down, which is good news for their most important objective, but unfortunately for the market, it is happening at the same time as consumers continue to reduce their spending,” Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, wrote Friday.

Investors also looked at consumer sentiment data Friday. According to results from the University of Michigan’s Survey of Consumers, the consumer sentiment index rose to 59.7 this month, which was higher than economists were expecting.

“Sentiment remains relatively downbeat at 15% below a year ago, but consumers’ extremely negative attitudes have softened this month on the basis of easing pressures from inflation,” Joanne Hsu, director of surveys at the University of Michigan, said in the news release.

Economic data were a major focus of investors throughout the week, who are looking to see signs of cooling inflation and what the likelihood of a recession will be.

 

“We were reminded, yet again, that this isn't a normal holiday season,” Quincy Krosby, chief global strategist for LPL financial, wrote about the markets this week. “A clutch of solid economic data including a surprisingly solid GDP report, lower than expected continuing claims, and personal consumption data that suggests a still resilient consumer, coupled with higher expectations, had the market veer instantly into the ‘good news is bad news’ scenario.”

The Federal Reserve’s efforts to tame inflation that hit 40-year highs earlier this year and concerns those efforts will push the U.S. into a recession have weighed on the market in 2022. They also have weighed on trading in December and have reduced hopes for a so-called Santa Claus rally.

“The Santa rally looks to be short-lived across the pond as U.S. stocks came under pressure from renewed interest rate fears,” said Matt Britzman, equity analyst at Hargreaves Lansdown in the U.K. Third-quarter U.S. GDP growth that was revised higher “wasn’t expected and led many investors to fear interest rate hikes would continue for longer in the absence of any real data to suggest the US economy is in distress.” According to the CME FedWatch tool, about 66% of trades expect the next interest-rate hike to be 0.25-point.

https://www.barrons.com/livecoverage/stock-market-today-122322/card/stock-futures-mostly-higher-ahead-of-inflation-data-VbyclnycmsBTEvdxReyi