4:15pm Indexes enjoy best month since July 2022
The Dow closed Thursday up 520 points, 1.5%, to 35,951, while the Nasdaq Composite fell 32 points, 0.2%, to 14,226 and the S&P 500 added 17 points, 0.4%, to 4,568. The small-cap Russell 2000 index ticked up 3 points, 0.2%, to 1,807.
The major indexes each had their best months since July 2022. The Dow closed November up 8.6%, the Nasdaq improved 10.7% and the S&P 500 gained 8.9%.
“A lot of what we’ve seen in November is just a realization that the economy is still doing well, that consumers are resilient and the Fed is on hold, more than anything else,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “Assuming those conditions stay between now and the end of the year—which is our most likely scenario—we think the market will continue to drift higher.”
12:05pm: Dow soars but markets mixed
US stocks remained mixed as investors digested the latest inflation figures and the outlook for the economy and interest rates.
At midday, the Dow Jones Industrial Average was up 304.47 points, 0.9%, at 35,734.89, the S&P 500 was down 5.15 points, 0.1%, at 4,545.43 while the Nasdaq Composite fell 99.07 points, 0.7%, at 14,159.42.
US inflation is heading in the right direction, although the bulk of the PCE readings were in line with expectations, sais Craig Erlam at Oanda.
"Still, the monthly headline figure printing at 0% was another step in the right direction and below market expectations which again suggests disinflationary pressures are stronger than central banks have been willing to accept," he added.
"Policymakers at the Fed must already be considering withdrawing such a hawkish rhetoric after the meeting in two weeks and it will be interesting to see whether the jobs and CPI inflation reports in the interim tip them one way or the other."
9:43am: Stocks mixed and dollar falls back after PCE data
US stocks opened mixed after the US central bank’s preferred inflation gauge eased as expected boosting hopes that interest rates may fall sooner than thought.
Shortly after the opening bell, the Dow Jones Industrial Average was up 201.86 points, 0.6%, at 35,632.28, the S&P 500 was little changed at 4,551.23 while the Nasdaq Composite fell 20.04 points, 0.1%, at 14,238.45.
Andrew Hunter at Capital Economics said: “The muted rise in real consumption and further decline in core PCE inflation in October will reinforce the growing belief in markets that interest rate cuts are on the horizon.”
The core personal consumption expenditures price index, which strips out the volatile food and energy components, rose 0.2% last month, according to the Bureau of Economic Analysis.
From a year ago, the Federal Reserve’s preferred gauge of underlying inflation advanced 3.5%.
The headline PCE index rose 3.0% on-year last month, cooling from September's 3.4% rise.
The figures were in line with market hopes.
Hunter said: “We continue to see a good chance that the Fed will begin cutting rates in March next year, a little sooner than markets are expecting.”
“And with a growing body of evidence that inflation will be lose to the 2% target by mid-2024, we also think markets still haven’t gone far enough in pricing in rate cuts over the next 18 months.”
Inflation-adjusted personal spending rose 0.2% last month after a downwardly revised 0.3% advance in September, according to the Bureau of Economic Analysis, suggesting consumers are reigning back spending ami8d high interest rates.
The Fed’s latest Beige Book survey, released Wednesday, showed economic activity slowed in recent weeks as households pulled back on discretionary spending.
Separate numbers from the US Department of Labor showed initial jobless claims amounted to 218,000 in the week that ended November 25, an increase from 211,000 the week before.
The latest reading came in below the FXStreet-cited market consensus of 220,000. The previous week's reading was upwardly revised from 209,000.
7:00am: US futures climb ahead of inflation reading
US futures are pointing to a upbeat start on Wall Street although investors will be closely watching inflation data ahead of the open.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.4%, while those for the S&P 500 were 0.2% higher, and contracts for the Nasdaq 100 futures rose 0.2%.
The US Federal Reserve’s preferred inflation metric, the core personal consumption expenditures index, is expected to have risen 0.2% in October.
Economists forecast the year-on-year increase to have eased to 3.5% from 3.7% in September.
Elsewhere, initial US state unemployment applications, a proxy for lay-offs, are projected to have totalled 220,000 last week, following the previous week’s bigger-than-expected drop to 209,000.
Grocery chain Kroger will release results before Wall Street’s opening bell while PC maker Dell and beauty store chain Ulta report their numbers after the closing bell.
The ongoing Opec meeting will be watched closely given market speculation that production cuts may be unveiled.
Joshua Mahoney at Scope Markets said with energy price weakness having played a key role in driving down inflation, all eyes will be on today’s OPEC meeting as Saudi Arabia seek to bolster the price of their key export.
“While we have seen concerns grow over the potential struggles finding agreement over production levels for nations in Africa, there is speculation that Saudi will seek to drive additional production limits in a bid to lift energy prices,” he said.