U.S. stocks extended their losses on Friday morning as a vicious bout of selling that plagued the month continued ahead of the long holiday weekend.
US stock and bond markets will be closed on Monday, December 26, Christmas Day. Bond markets will close an hour earlier than usual on Friday at 2 p.m. ET.
The PCE core price index — the The Fed’s favorite inflation measure – got up at one annual 5.5% in November and 0.1% from the previous month, on par with consensus estimates from economists polled by Bloomberg. The figure marked a moderation in the readings of 6.1% and 0.3%, respectively, in October.
Core PCE, which excludes volatile components of food and energy, rose 4.7% year-on-year and 0.2% on a monthly basis.
Meanwhile, personal spending stagnated in November to the lowest figure since July.
Investors will also get information on the latest University of Michigan consumer sentiment survey and new home sales.
“The Federal Reserve’s preferred inflation measure continues to fall, which is good news for its most important target, but unfortunately for the market, this is happening at the same time consumers continue to cut spending,” said independent advisor Alliance Chief Investment. Officer Chris Zaccarelli said in a note.
He added: “At this point, the market has been pushed into a corner, as more robust spending and higher growth are indirectly damaging the stock market (as it is likely to trigger an even stronger hawkish reaction from the Fed), while slower spending and growth is directly detrimental to the stock market, as it implies lower corporate earnings.”
After the Fed final political decision of 2022 last week, strategists pointed out that the most surprising data point among officials’ economic projections was an upward revision to their core PCE expectation to 3.5% from 3.1% previously at the end of 2023. This has suggested to many analysts that the Federal Reserve will need to hold rates at a high terminal rate through 2023.
“We expect the Fed to revise its forecast downward as early as March, although progress will initially be slow; policymakers seem to have been scarred by the experience of the past year and a half, and will want to be sure they don’t. not drop their numbers prematurely,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note. “The markets will not wait.”
Friday’s moves come after a brutal previous trading day which saw the S&P, Dow and Nasdaq register losses of 1.4%, 1% and 2.2%, respectively. Investors were spooked by a warning from chipmaker Micron Technology about the semiconductor industry and strong labor market and consumer spending data that confirmed the “higher” interest rate outlook for Longer”.
Oil prices rose on Friday and headed for a big weekly gain as investors expected a drop in Russian crude supply. That helped ease concerns about a drop in U.S. transportation fuel demand ahead of a winter storm moving into North America. West Texas Intermediate (WTI) crude futures – the US benchmark – rose 2% to $79 a barrel.
Yields on US Treasuries rose slightly, while the US dollar index fell against a basket of other currencies.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc