Key points:
- Dow Jones escapes daily loss
- S&P 500, Nasdaq Composite tumble
- Coming up: Fed’s favored inflation gauge
Dow’s peers S&P 500 and Nasdaq erased some solid intraday gains and now markets await the Fed’s favored inflation measure, PCE.
- The Dow Jones Industrial Average
DJI barely kept it together Thursday after it erased more than a 200-point gain and closed the session up by a mere 15 points. It ain’t much, but it’s honest work — and it worked — the 30-stock index snapped a historic 10-day losing streak, the longest since 1974. No celebration was had on Wall Street as investors still frown upon the Fed’s intentions for 2025. - It’s a tough pill to swallow — Fed boss Jay Powell said Wednesday that policymakers have decided to revise their guidance for next year and plan to do only two cuts to interest rates, down from a prior projection of four. In other words, money won’t be as cheap as expected, liquidity will be tighter and monetary policy conditions won’t allow for too much cash flowing around public markets.
- With traders still digesting the news, the Dow’s two peers crumbled under the pressure. The S&P 500 was down by 0.1%, after washing out a session advance of more than 0.5%. In a similar fashion, the tech-heavy Nasdaq Composite wiped out 0.6% to close in the red by 0.1%. Still, US stocks have had a tremendously successful 2024 and are on track to secure a second straight year with annual gains of more than 20%.
- But before that, the Federal Reserve’s preferred inflation measure is due for release today. The personal consumption expenditures index (PCE) is expected to show prices increased by 2.9% in November, on an annualized basis. The projected readout is more than October’s 2.8% and signals growing inflation pressures. Especially after November’s headline inflation ticked up to 2.7%, according to the CPI index released last week.
