Stocks finished lower on Wednesday, as investors picked through a key set of growth and inflation data heading into the final full trading day of the Thanksgiving holiday week.
The Dow Jones Industrial Average slipped 138.25 points, or 0.31%, to finish the session 44,722.06, while the S&P 500 slipped 0.38% to close 5,998.74 and the tech-heavy Nasdaq lost 0.60% to end the day at 19,060.48.
Quincy Krosby, chief global strategist for LPL Financial, said the 10-year treasury yield inched slightly higher following the release of the PCE Price Index report, suggesting that overall, the Treasury market wasn't particularly concerned about the 2.8% print for core year-over-year inflation.
“Equities have been mixed following the release and it's interesting that the Russell 2000 moved into positive territory as it is highly sensitive to potential interest rate cuts,” Krosby said.
“The futures market sees more than a 60% chance for a December 18 rate cut despite the Fed minutes underscoring that the Fed, by and large, wants to maintain a 'gradual' approach towards further easing,” she added.
With the economic landscape underpinned by a resilient labor market, and solid consumer spending, Krosby said the Fed remains concerned about lower wage earners still struggling with higher interest rates, and small businesses coping with higher prices and bank loans.
“The last mile towards price stability has been stymied by still ‘sticky’ inflation and bumps along road,” she said.
Updated at 12:00 PM EST
Taking profits
Stocks are drifting lower into the mid-day break, with the Nasdaq leading declines, following a busy morning of economic data releases that indicated stubborn inflation pressures, solid economic momentum and improving consumer prospects
"This is the first holiday season with inflation below 3% since 2020. Now we finally get a read on how people are feeling in an environment with price stability. That could be a recipe for strong holiday sales," said Scott Helfstein, Global X's head of investment strategy.
"With inflation coming down, companies have less pricing power going into the holiday season for the first time in four years," he added. "They need volume, evidenced by the pre-Black Friday sales. With incomes rising, the consumer is likely to deliver big."
Still, with a long holiday weekend ahead, and stocks on an eight-day winning streak, investors appear content to book some profits on the final full trading day of the month, with the S&P 500 down 29 points, or 0.48% from last night's record close and the Nasdaq falling 205 points, or 1.07%.
October personal income (blue) +0.6% month/month vs. +0.3% est. & +0.3% prior … spending (orange) +0.4% vs. +0.4% est. & +0.6% prior (rev up from +0.5%) pic.twitter.com/KBJycoVrd0
— Liz Ann Sonders (@LizAnnSonders) November 27, 2024
Updated at 10:13 AM EST
Spending ... still
The Federal Reserve's preferred measure of inflation edged higher in October, data indicated Wednesday, thanks in part to the ongoing boom in consumer spending that is challenging the central bank's effort to tame price pressures.
The Bureau of Economic Analysis' PCE Price Index report showed core prices rose at an annual rate of 2.8% last month, just ahead of the September reading of 2.7% and matching Wall Street's 2.8% forecast.
Stocks were little-changed following the data release, with the S&P 500 down 9 points, or 0.15% and the Dow gaining 60 points. The tech-focused Nasdaq was last marked 85 points, or 0.44% lower on the session.
Benchmark 10-year note yields marked at 4.256% following the data release, while 2-year notes were pegged at 4.219%.
The Fed's preferred measure of inflation (Core PCE) moved up to 2.8% in October, the highest reading since April. https://t.co/l5IYmkeySJ pic.twitter.com/1Ute9S6YQz
— Charlie Bilello (@charliebilello) November 27, 2024
Updated at 9:35 AM EST
Mixed Open
The S&P 500 slipped 7 points, or 0.12%, in the opening minutes of trading, with the Nasdaq off 59 points, or 0.31%.
The Dow added 128 points while the Russell rose 19 points, or .081%, to put the mid-cap index on pace for a fresh all-time high.
S&P 500 Opening Bell Heatmap (Nov. 27, 2024)$SPY -0.12%🟥$QQQ -0.40%🟥$DJI +0.07%🟩$IWM +0.75%🟩 pic.twitter.com/QAkolftVZz
— Wall St Engine (@wallstengine) November 27, 2024
Updated at 8:39 AM EST
Data appetizer
Weekly jobless claims slipped to the lowest level since April over the period ending on November 23, with 213,000 Americans filing for first-time unemployment benefits.
The Commerce Department's second estimate of third quarter GDP, meanwhile, matched its initial estimate of a 2.8% advance.
Stocks and Treasury bond yields were little-changed in the wake of the data release, and ahead of the PCE inflation data at 10:00 am Eastern, with the S&P 500 called 5 points lower and benchmark 10-year Treasury notes holding at 4.256%.
Continued strong-to-quite-strong US data across the board this morning:
— Matt Weller CFA, CMT (@MWellerFX) November 27, 2024
🔷US INITIAL JOBLESS CLAIMS ACTUAL 213K (FORECAST 215K, PREVIOUS 213K)
🔷US GDP QOQ 2ND ESTIMATE ACTUAL 2.8% (FORECAST 2.8%, PREVIOUS 2.8%)
🔷US PRELIM OCT. DURABLE GOODS ORDERS RISE 0.2% M/M; EST. +0.5% pic.twitter.com/DKNfsSjNLb
Stock Market Today
Stocks ended at fresh record highs Tuesday, with the S&P 500 rising 0.57% on the session to extend its year-to-date advance past 25.5%. The market move followed solid consumer confidence data and news of a Biden-brokered ceasefire between Israel and Hezbollah that could stabilize a region devastated by two years of conflict.
Bond markets, which have been active for most of the week amid a slate of new Treasury auctions and a host of nominees to President-elect Donald Trump's economic team, extended their rally overnight following a cautious set of minutes from the Federal Reserve's November policy meeting.
Traders are still betting on a quarter-point interest rate cut next month, when the Fed meets for the final time this year in Washington but have pared bets on further reductions into 2025 as officials said that "monetary policy decisions were not on a preset course and were conditional on the evolution of the economy and the implications for the economic outlook."
Benchmark 10-year note yields were marked 4 basis points lower overnight at 4.263% while 2-year notes were pegged at 4.219%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.54% lower at 106.439.
The Bureau of Economic Analysis will publish the October reading of the Fed's favored inflation gauge, the PCE price index, at 10:00 am Eastern Time, with weekly jobless-claims figures and a second estimate of third-quarter GDP from the Commerce Department at 8:30 am Eastern time.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which closed at a record 6,021.63 points last night, are priced for a modest 9-point opening-bell decline.
Related: Goldman Sachs analyst sees starting point for year-end S&P 500 rally
Futures linked to the Dow Jones Industrial Average, meanwhile, are indicating a 35-point slip while those linked to the tech-heavy Nasdaq are called 55 points lower at the start of trading.
Dell Technologies (DELL) shares were a notable premarket mover, falling 12% to $125.10 after the computer maker reported weaker-than-expected fiscal-third-quarter earnings and a muted holiday forecast.
More Wall Street Analysts:
- Walmart analysts reset stock price targets ahead of Black Friday
- Analysts revamp Cisco stock price targets after earnings
- Analysts revisit Applied Materials stock price targets after Q4 earnings
Stocks in overseas trading were broadly lower, with investors reacting to Trump's newest cabinet pick, Jamieson Greer, as U.S. trade representative. Greer, who worked closely with Trump on tariff decisions during his first term, is seen as hawkish on trade issues with the largest U.S. partners.
Europe's Stoxx 600 was marked 0.3% lower in midday Frankfurt trading, with the FTSE 100 edging 0.13% higher in London.
Overnight in Asia, Japan's Nikkei 225 fell 0.8% as the yen rose to a three-week high against the weaker U.S. dollar, while the regional MSCI ex-Japan benchmark rose 0.53% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
