US stocks drop as investors mull mixed signals on spending and inflation data
US stocks dropped after core inflation data and consumer spending sent different signals about the economy.
Core inflation dropped below 3% year-on-year, while consumer spending rose 0.7%.
Yields on the 2-year US Treasury rose higher after the releases to 4.33%.
US stocks were mixed Friday as investors digested fresh economic data.
Core Personal Consumption Expenditure data, which is the Federal Reserve's preferred inflation gauge and which measures long-term price increases excluding food and energy, slowed to 2.9% in December from 3.2% the month before. That's the lowest pace of chance since Spring 2021.
Meanwhile, consumer spending data showed Americans are still spending at a strong pace. Capping off the year-end holiday season, personal spending rose 0.7% by $133.9 billion in December. The data points to strong demand from US consumers, and shows the economy is still running hot even as higher interest rates keep a tight grip on financial conditions.
Yields on the two-year US Treasury, which is the government bond more sensitive to the Fed's immediate moves, rose higher after the releases to 4.33%.
"We view today's PCE and Personal Spending data as bullish for both the Fed's path to their 2% target and also for the stock market," Larry Tentarelli, strategist from Blue Chip Daily Trend Report, said. "PCE continues to trend lower and with Core PCE at 2.9% [year-on-year] vs a Fed funds rate of 525-550, today's inflation report gives the Fed a path to cut interest rates."
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Friday:
S&P 500: 4,896.70, up 0.05%
Dow Jones Industrial Average: 38,075.85, up 0.06% (+23.76 points)
Nasdaq Composite: 15,496.26, down 0.09%
Here's what else is going on:
Wall Street legend Burt Malkiel dismisses S&P 500 and recession forecasts, slams bitcoin, and warns pricey stocks may limit investors' returns.
Jeffrey Gundlach is wary of stocks at current valuations, and expects a recession to hit.
The US economy is likely headed for another 'roaring '20s' of rapid growth, market veteran Ed Yardeni says.
These 7 recession indicators are still glaring bright red, signaling a sharp downturn could be imminent despite surging GDP and low unemployment.
In commodities, bonds, and crypto:
Oil prices dipped, with West Texas Intermediate down 0.45% to $76.98 a barrel. Brent crude, the international benchmark, edged lower by 0.2% to $82.25 a barrel.
Gold climbed 0.33% to $2,024.40 per ounce.
The 10-year Treasury yield was up one basis point to 4.145%.
Bitcoin went up 3.52% to $41,157.87.
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