A consumer shops for groceries at a retail store on December 12, 2023 in Rosemead, California.
Frederick J. Brown | AFP | Getty Images
Can you see the finish line?
The US core personal consumption expenditure price index rose only 0.1% in November. The increase was 3.2% compared to the previous year, which was 10 basis points lower than expected. On a six-month basis, core PCE rose 1.9%, below the Federal Reserve’s 2% target, indicating that the Fed has effectively met its inflation target if current trends continue.
8 positive weeks
US stocks were mixed on Friday, but the major indexes still posted their eighth consecutive week of wins, marking the beginning of the Santa Claus Rally. The pan-European Stoxx600 index rose 0.14%. London’s FTSE 100 index rose 0.04% despite a revised reading of the UK economy contracting 0.1% in the third quarter, worse than previously expected.
game over
Tencent and NetEase, two giant technology conglomerates based in China, have since seen their stock prices fall. China announces surprising rules The purpose is to curb excessive gaming and spending. Tencent shares fell 12.35% on Friday afternoon, and NetEase fell even more sharply by 24.6%. But analysts say smaller developers will be hit even harder by the rule.
El Niño’s “sweet tooth”
Even as inflation subsides in many developed countries, soft commodities such as orange juice, cocoa, coffee and sugar are set to post record gains in 2023. This is because they are affected by supply concerns related to El Niño, an abnormal weather and climate pattern. That causes ocean temperatures to rise, leading to storms and droughts that disrupt crops.
[PRO] Last trading week
After two strong months in which the market broke several records, stocks will look to maintain their momentum heading into the final weeks of the year. CNBC’s Sarah Ming notes that it’s usually a strong time for the stock market, as the Santa Claus rally cheers investors up, even when volume and economic data are expected to be low.
Inflation appears to be falling decisively, not only in terms of the prices of goods, but also in terms of what consumers actually perceive.
The Personal Consumption Expenditure Price Index measures how much consumers spend on goods and services. In contrast, the Consumer Price Index tracks the prices of goods and services rather than actual consumer behavior.
So when the report says headline PCE, which includes food and energy costs, fell 0.1% month-over-month, it means the prices of what consumers actually spent money on fell in November. This is the first monthly decline since April 2020.
On an annual basis, the headline number is up just 2.6%.
“Given that a further sharp slowdown in rent inflation is still underway, it is difficult to see any credible reason why annual inflation will not return to the 2% target in the coming months,” said U.S. Deputy Secretary of State Andrew.・Mr. Hunter stated. Economist at Capital Economics.
Despite the positive PCE numbers, the market wasn’t too excited. This is likely because most of the positive inflation news was already priced in after November’s CPI report and dovish Fed.
The S&P 500 rose 0.17% and the Nasdaq Composite rose 0.19%.
In fact, the Dow Jones Industrial Average fell 0.05% as Nike’s stock weighed on the index. Shares fell about 12% after the company lowered its full-year sales forecast.
Still, all major U.S. indexes have achieved their eighth straight week of positive results, the first time since 2017 for the S&P and the first time since 2019 for the Dow. For the week, the S&P rose 0.8%, the Dow 0.2% and the Nasdaq 1.2%.
Even more impressive is the Russell 2000, which tracks the world’s smallest 2,000 stocks. Russell 3000 Indexhas risen 2.46% week to date, marking its sixth consecutive weekly win. Small-cap stocks are more sensitive to fluctuations in the broader economy, so a rise in small-cap stocks signals a return to confidence among investors and businesses.
“This highlights the breadth and depth of this holiday rally, and we think it bodes well for investors as we move into 2024,” said Greg Bask, CEO of AXS Investments. said.
And everyone wants to see that next year. Stock prices, not prices, indicate strength.
—CNBC’s Jeff Cox contributed to this report.