US stocks climb as the Fed's favorite inflation gauge slows more than expected
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- US stocks traded higher on Friday as the Fed's preferred inflation gauge came in below views.
- The personal consumption price index was up 2.6% on a yearly basis, down from the prior month's 3% pace.
- Bond yields fell as investors continued to price in Fed rate cuts early next year.
US stocks traded higher on Friday after the Federal Reserve's preferred inflation gauge came in below expectations, reinforcing views that rate cuts are on the way next year.
The personal consumption price index was up 2.6% in November on a yearly basis, down from the prior month's 3% pace and slower than expectations for a 2.8% gain. On a monthly basis, prices dipped 0.1%, marking the first such decline since April 2020.
Excluding food and energy prices, the PCE rose 3.2% annually, slowing from 3.5% and also undercutting forecasts.
The data show inflation continues to head toward the Fed's 2% target, allowing a shift in monetary policy, though investors have already priced in lower rates after central bankers indicated three cuts are coming in 2024.
On Friday, the FedWatch Tool showed the odds for the first cut arriving in March were at 73%, little changed from the prior day.
Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Friday:
- S&P 500: 4,768.95, up 0.5%
- Dow Jones Industrial Average: 37,490.22, up 0.2%
- Nasdaq Composite: 15,034.53, up 0.5%
Here's what else happened today:
- Morgan Stanley's CEO blamed 2023's bank failures on "stupidity of their own management."
- Tesla's market capitalization will return to $1 trillion in 2024, analysts at Wedbush predicted.
- Tesla CEO Elon Musk complained about running a publicly traded company.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil rose 1.1% to $74.72 a barrel. Brent crude, the international benchmark, climbed 1% to $80.09 a barrel.
- Gold ticked up 1.4% to $2,079.50 per ounce.
- The 10-year Treasury yiedl fell 3.4 basis points to 3.86%.
- Bitcoin dipped 0.3% to $43,579.