The Federal Reserve's primary inflation rate, the core PCE price index, saw just a tepid rise in November after a couple of elevated readings. The S&P 500 erased early losses, then turned sharply higher in early Friday stock market action.
The inflation outlook remains uncertain. Markets were jolted by Wednesday's Fed meeting, when Chairman Jerome Powell compared "policy uncertainty" related to the incoming Trump administration to "driving on a foggy night."
"You just slow down," Powell said, hinting at a pause in rate cuts.
PCE Inflation
The PCE (personal consumption expenditures) price index rose 0.1% overall vs. 0.2% expectations. The 12-month PCE inflation rate rose to 2.4% from 2.3% in October, but held below 2.5% estimates.
The core PCE price index, which strips out food and energy, rose 0.1%, undercutting 0.2% forecasts. The Fed's key 12-month inflation rate held at 2.8%, avoiding an anticipated rise to 2.9%.
Fed Rate-Cut Odds
After the PCE inflation report, markets are pricing in just 11% odds of a further rate cut in January, but odds of a cut at the March 19 Fed meeting ticked up to 52% from 49% on Thursday, according to CME Group's FedWatch page.
S&P 500
The S&P 500 climbed 1.4% in Friday morning stock market action, a dramatic improvement from down around 0.9% before the inflation data.
The S&P 500 gave up early gains on Thursday, ending down 0.1%. The S&P 500 has fallen 3.4% over a three-session losing streak, the worst such stretch since early August.
Through Thursday, the S&P 500 is 3.7% below its all-time high on Dec. 6, but still up 23% for the year.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
