Wall Street shares rose Friday after the Fed’s favorite inflation gauge rose in line with expectations, but consumer spending fell for the second month in a row.
The Wall Street benchmark S&P 500 rose 0.4%, while the tech-heavy Nasdaq Composite rose 0.7%.
Intel shares fell 7.5% after the semiconductor maker said this quarter’s sales are expected to be around $3 billion below analyst expectationsOil major Chevron fell 4% despite reporting record earnings for 2022 and was cut after its fourth-quarter earnings cooled. Meanwhile, credit card company American Express increased its full-year revenue by 25% to nearly $52.9 billion.
The stock market move came as December’s core consumer spending index, which excludes energy and food inflation, rose an expected 0.3% month-on-month after November’s 0.2% increase. However, real private consumption fell 0.3% following his 0.2% decline in the previous month. Capital Economics North America chief economist Paul Ashworth said this suggested the U.S. was “on the brink of a recession and may have already fallen off a cliff.”
Key U.S. Inflation Rates While Still Near Multi-Decade Highs dropped to the lowest level Over a year in December. Yet Fed Chairman Jay Powell argues that core inflation “often gives a better indication of where overall inflation is headed.”
After the inflation announcement, the 10-year US Treasury yield rose 0.04 points to 3.53%, keeping US Treasurys under pressure. Bond yields move inversely with prices.
U.S. stocks rose on Thursday after fourth-quarter 2022 gross domestic product was released Exceeded expectations, rising at an annual rate of 2.9%. That was above economists’ expectations of his 2.6% and a modest slowdown from his 3.2% in the previous quarter.
“Inflation is well above target, which perfectly justifies continued rate hikes by the Federal Reserve,” said James Knightley, chief international economist at ING.
But “dig a little deeper,” Knightley added. Investment fell sharply, with non-residential capital spending, or ‘essentially business capital spending’, growing by only 0.7%.
Instead, much of the GDP gains reflected “increasingly involuntary” inventory building by mining, construction and manufacturing groups as consumer demand continues to soften, he said.
Investors strongly expect the Fed to raise rates by a quarter of a percentage point next week, signaling a slowdown from the 0.5 percentage point rate hike implemented in December. Powell’s forward guidance and the language he employs in his post-rate decision press conference may therefore be the center of attention.
A measure of the dollar’s strength against a basket of six currencies rose 0.2% on Friday while the price of international oil benchmark Brent crude fell 1% to $86.54 a barrel, erasing previous gains. I got
In Asia, Hong Kong’s Hang Seng Index was up 0.5%, Japan’s benchmark Nikkei 225 was up almost 0.1%, and South Korea’s Kospi was up 0.7%. Chinese markets are closed for the Lunar New Year holiday.
The European regional Stoxx 600 closed 0.3% higher, Germany’s Dax was up 0.1% and London’s FTSE 100 was up 0.05%.