Stocks ended mixed on Friday, the last trading day before Christmas, but still posted an eight-week winning streak as the Fed's preferred inflation gauge showed prices fell last month for the first time since 2020.
The S&P 500, which registered its longest winning streak since 2017, gained 0.17%, while the Dow Jones Industrial Average lost 18 points, or 0.05%, while the tech-heavy Nasdaq advanced 0.19%.
The personal consumption expenditures (PCE) price index, fell 0.1% in November from October, the Commerce Department's Bureau of Economic Analysis said, marking the first monthly decline in the PCE price index since April 2020 and following an unchanged reading in October.
"Disinflation is in the data now, and that is wildly positive for the economy and the market," said Jamie Cox, Managing Partner for Harris Financial Group. "The Federal Reserve is very likely to begin cutting rates in March."
In company news, Nike (NKE) -) shares tumbled nearly 12% after the sportswear giant and Dow component issued a muted full-year revenue outlook and cost-cutting plan that offset a solid fiscal-second-quarter earnings report.
Shares of Karuna Therapeutics (KRTX) -) skyrocketed to finish up 47.7% after the neurological-drug specialists agreed to a $14 billion takeover by pharma giant Bristol Myers Squibb (BMY) -).
Updated at 1:22 PM EST
Stocks extend their December rally Friday and remain on track for a positive five-day stretch that would extend the S&P 500's weekly winning streak to eight, the best since 2017, heading into the final trading sessions of the year.
The Dow Jones Industrial Average rose 60 points or 0.16%, while the S&P 500 gained 0.40% and the tech-heavy Nasdaq advanced 0.45%.
The personal consumption expenditures (PCE) price index, fell 0.1% in November from October, the Commerce Department's Bureau of Economic Analysis said, marking the first monthly decline in the PCE price index since April 2020 and following an unchanged reading in October.
"These better-than-expected results brought the pace of year-over-year core PCE inflation to its lowest level in over two years," said Sam Millette, director of fixed income for Commonwealth Financial Network. "This is the Federal Reserve’s preferred inflation gauge so the continued improvement in November will be a welcome sign for central bankers monitoring the ongoing battle against inflation."
--Rob Lenihan
Updated at 9:54 AM EST
Santa Claus comes early
Stocks are building solid gains into the final session of the week, with investors getting a head start on the traditional 'Santa Claus rally' that typically begins on the first trading day after the Christmas break.
The S&P 500 was last marked 25 points, or 0.52% higher in the opening hour of trading while the Dow shook-off a 10.5% Nike slump to gain 126 points. The Nasdaq was marked 82 points, or 0.55% higher.
Updated at 8:55 AM EST
Inflation on target?
The Fed's favored inflation gauge is now trending at the central bank's preferred 2% target, based on data compiled over the past six months, cementing the case for spring rate cuts.
Futures were modestly firmer following the data release with futures tied to the S&P 500 indicating a 10 point opening bell gain and those linked to the Dow suggesting a 52 point decline. The Nasdaq is called 37 points higher.
Benchmark 10-year Treasury note yields were 2 basis points higher at 4.871% thanks in part to modestly firmer personal income gains found in the release. Two-year notes were pegged at 4.344%.
Related: Fed Inflation gauge falls below 3%, with core prices at March 2021 low
Updated at 8:00 AM EST
Big drug deal
Bristol Myers added to its recent string of major acquisitions with the $14 billion takeover of neurological drug specialists Karuna Therapeutics (KRTX) -), sending shares in the Boston-based group soaring 47% in pre-market trading.
Related: Karuna Therapeutics soars after $14 billion takeover by Bristol Myers
Stock Market Today
The major U.S. stock markets are expected to remain open for the full trading day Friday, although bond markets will close shop at around 1 pm eastern time ahead of the three-day holiday weekend.
Traders will first have to navigate a key inflation reading at 8:30 am, when the Bureau of Economic Analysis publishes its closely watched Personal Consumption Expenditures Price Index for November.
Economists expect the Federal Reserve's preferred inflation gauge to show another notable slowing in overall and core price pressures heading into December that are likely to cement the market's case for rate cuts beginning in the spring,
Stocks, meanwhile, are likely to be pulled lower by Nike's (NKE) -) disappointing fiscal-second-quarter earnings and muted near-term outlook. That's clipped consumer and sports apparel stocks and looks to set to take around 92 points from the Dow at the start of trading.
Related: Nike slumps after cutting full-year sales forecast on sportswear weakness
Futures contracts tied to the S&P 500 are indicating a 1 point opening bell gain, with the Dow called 77 points lower and the Nasdaq set for a 12 point decline.
In overseas markets, the Stoxx 600 was marked 0.1% higher in early Frankfurt trading and was holding on to a 12% gain for the year. The FTSE 100 rose 0.13% in London.
Overnight in Asia, a newly announced crackdown on the videogame industry by officials in Beijing hammered gaming and tech stocks and pulled the regionwide MSCI ex-Japan index 0.28% lower into the close of trading.
Japan's Nikkei 225, meanwhile, rose 0.1% in muted Friday trading to take its 2023 gain to just under 29%.
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