4:10pm: Fourth day of gains
Wall Street closed the week on a cautiously upbeat note Friday, with the S&P 500 and Nasdaq extending their recent winning streaks.
The S&P 500 notched a second consecutive week of gains and remains within striking distance of all-time highs, with stocks marking their fourth straight day of advances.
The Dow Jones Industrial Average climbed 104 points, or 0.2%, to finish at 47,955, while the S&P 500 added 13 points, also up 0.2%, closing at 6,870. The tech-heavy Nasdaq led the charge with a 0.3% gain, ending at 23,578. The Russell 2000 slipped 0.4% to 2,521.
Investors digested fresh economic data that slightly cooled inflation concerns. A delayed reading of the PCE price index showed overall inflation in September was in line with expectations, while the Fed’s preferred “core” measure rose a modest 2.8% year-over-year. Meanwhile, US consumer confidence ticked higher for the first time in five months, with respondents’ inflation expectations easing.
The data pushed traders closer to betting on a potential rate cut at next week’s Federal Reserve meeting.
Friday’s session capped a week where investors balanced optimism over easing inflation with careful eyes on the Fed’s next move.
3:10pm: Market movers
- Ulta Beauty surged after posting a strong Q3 earnings beat and raising its full-year outlook.
- DocuSign fell as cautious forward guidance overshadowed its better-than-expected quarterly revenue.
- Rubrik jumped after delivering Q3 results that far exceeded analyst forecasts, including 48% revenue growth.
- SentinelOne dropped as weak guidance and the CFO’s departure outweighed its Q3 earnings beat.
- Victoria’s Secret rallied after reporting stronger-than-expected Q3 results and improving its full-year guidance.
2:25pm: Consumer inflation expectations ease to 11-month lows
Consumer sentiment ticked higher in December, while inflation expectations fell to their lowest levels in nearly a year, according to preliminary data from the University of Michigan.
The headline sentiment index rose to 53.3 from 51 in November, marking its first monthly increase since July. The survey also showed that both short- and long-run inflation expectations dropped to 11-month lows, offering a sign of easing price concerns even as households continue to face a sluggish job market and elevated costs.
1:50pm: Fed faces rare split
The Federal Reserve is likely to deliver a final 25-basis-point rate cut at its December 2025 meeting, but Deutsche Bank expects the decision to spark rare divisions among policymakers. The bank said the move “will not be unanimous and is likely to feature dissents in both a hawkish and dovish direction,” adding that four or more dissents would mark the first such split since 1992.
To limit pushback, analysts expect Chair Jerome Powell to emphasize that the bar for further easing in early 2026 remains high. Deutsche Bank noted that Powell “would have to indicate an intent to look through some of the softness” in upcoming jobs data for the guidance to hold.
Projections in the Fed’s Summary of Economic Projections are likely to shift only slightly, with the median outlook still signaling one cut in each of the next two years. The bank expects growth forecasts for 2025 and 2026 to be revised higher, inflation estimates nudged lower, and unemployment largely unchanged.
Deutsche Bank’s baseline view is that the Fed stays on hold through early 2026, with another cut expected in September under new leadership as disinflation resumes. The firm sees rates bottoming near 3.3%, though risks remain that “lingering labor market weakness forces the Fed to cut again in Q1.”
1:05pm: Netflix deal under scrutiny
Netflix Inc (NASDAQ:NFLX, XETRA:NFC)’s announcement that it will acquire Warner Bros Discovery Inc (NASDAQ:WBD, XETRA:J5A) in a $72 billion cash-and-stock deal has drawn a mixed response from analysts, as investors weigh the risks and potential rewards of one of the largest media transactions in history.
Analysts were cautious over execution and content risks. Kathleen Brooks, research director at XTB, noted investor concerns over Netflix’s track record with mega-deals. “Investors’ lack of enthusiasm is down to multiple factors, including a track history of mega buyouts going sour and not delivering their promised returns,” she wrote.
“Deals of this size and scope are complicated and execution needs to be perfect to deliver the expected benefits.”
Other analysts warn that navigating the regulatory landscape will be a complex and closely watched process. Antonio Di Giacomo, senior market analyst at XS.com, emphasized the regulatory challenges ahead. “The combination of Netflix with a company that operates HBO Max and holds nearly 130 million global subscribers raises significant concerns about market concentration and competition.
"Authorities in the United States and Europe are expected to conduct an in-depth review to assess potential monopoly risks, especially in digital distribution, content licensing, and negotiations with independent producers.”
11:50am: A look at the Netflix-WB deal
The big news of the day: Netflix Inc (NASDAQ:NFLX, XETRA:NFC) and Warner Bros Discovery Inc (NASDAQ:WBD, XETRA:J5A) announced an agreement under which Netflix will acquire Warner Bros, including its film and television studios, HBO Max, and HBO, in a $72 billion deal.
The deal combines Netflix’s global streaming platform with Warner Bros’ film and television operations and legacy franchises.
Under the terms of the agreement, each WBD shareholder will receive $23.25 in cash and $4.50 in Netflix stock per share.
The deal brings Warner Bros’ franchises, including Game of Thrones, The Wizard of Oz, and the DC Universe, together with Netflix’s library, which includes titles such as Stranger Things and Money Heist.
Netflix said it plans to maintain Warner Bros’ current operations, including theatrical releases, while expanding production capacity and investment in original content.
Shares of Netflix were down 2.9% nearing midday Friday trade, while Warner Bros Discovery stock added 2.8%.
11:10am: Markets eye Fed ahead of rate decision
With the Federal Reserve meeting next week, investors are focused on whether the central bank can cut interest rates despite inflation remaining above target. The latest PCE data showed inflation holding steady, supporting expectations for a 25 basis point rate cut.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, said, “Markets will be looking to see how the Fed – and especially Fed Chair Powell – describe the outlook for next year as the future path of rate cuts is much more controversial than whether or not a single 25 bps cut this month is warranted.”
Zaccarelli added that while the short-term outlook for stocks is positive due to economic growth, rate cuts, and rising corporate profits, volatility could increase next year as key macroeconomic indicators such as employment, inflation, and GDP growth shift.
10:35am: PCE holds steady
The US personal consumption expenditures (PCE) price index rose 0.3% in September from the previous month, pushing the year-over-year increase to 2.8%, government data showed Friday.
Core PCE, which strips out volatile food and energy prices, rose 0.2% month-over-month, in line with expectations, while the annual increase came in at 2.8%, slightly below the estimated 2.9%.
The readings suggest that inflation pressures remain relatively contained, giving the Federal Reserve continued room to assess the pace of interest rate adjustments.
9:55am: Markets climb
Markets opened Friday on a positive note, with the Dow Jones climbing 168 points, or 0.4%, to 48,019. The S&P 500 added 12 points, or 0.2%, to 6,869, edging closer to a fresh record high, while the Nasdaq rose 46 points, or 0.2%, to 23,552, marking its ninth gain in 10 sessions.
The Russell 2000 led the small-cap charge, up 19 points, or 0.8%, to 2,531, as investors regained appetite for risk and renewed confidence in the prospect of Fed easing.
Attention on Friday is focused on the September reading for the Fed’s preferred inflation gauge, the PCE price index, delayed by the recent government shutdown and due at 10 am ET. Other economic reports include September personal spending and income figures, as well as the University of Michigan’s December snapshot of consumer sentiment.
Meanwhile, the entertainment world is making headlines as Netflix (NFLX) announced plans to acquire Warner Bros. Discovery’s (WBD) studio and streaming assets in a staggering $72 billion deal, plus debt. The agreement, pending regulatory approval, would bring together Hollywood’s storied film and TV studios with the world’s largest streaming platform.
Netflix shares slipped more than 1% following the news, while Warner Bros. Discovery shares climbed 2%.
8am: Futures point to higher start
The Nasdaq is set for a strong open when trading gets underway in an hour and a half, with gains for the S&P 500 and the Dow Jones likely to be more muted.
Nasdaq futures are pointing to a 0.3% gain at the open, with those for the S&P 500 up by 0.2%, while Dow futures are lagging with a 0.1% gain.
The Nasdaq was also the frontrunner on Thursday, with big tech and growth names pushing it 0.2% higher. The S&P 500 closed 0.1% firmer while the Dow Jones slipped 0.1%.
Ahead of the opening bell, the US Bureau of Economic Analysis is expected to publish the closed watch core Personal Consumption Expenditures (PCE) report for September, delayed due to the recent government shutdown. This will help guide the US Federal Reserve's interest rate decision next week.
"The Personal Consumption Expenditures index, which is the Fed’s preferred measure of inflation, may well reveal that prices remain slightly higher than the Fed’s 2% target," commented interactive investor's Richard Hunter. "However, given the age of the data, any numbers may prove to be inconclusive and insufficient to change the central bank’s current thinking."
Meanwhile, European markets are also marking time ahead of next week's Fed decision, with little interim data available to move the dial, Hunter added.
London's FTSE 100 is up less than 0.1%, as are the DAX in Frankfurt and the CAC 40 in Paris.
Asian markets ended mixed, with Tokyo's Nikkei 225 shedding 1.1%, while the SSE Composite in Shanghai gained 0.7% and Hong Kong's Hang Seng closed 0.6% higher. In Mumbai, the BSE Sensex rose 0.5% and Sydney's ASX 200 added 0.2%.