Stock Market Update

[BRIEFING.COM] The stock market bounced back today after sharp declines this week. The major indices all settled at least 1.0% higher on above-average volume on this quarterly options/futures expiration day. The market still registered sharp declines at the index level compared to last Friday's close. Losses range from 1.8% to 4.5% this week.

Today's positive price action was fueled by a drop in market rates, along with comments from Chicago Fed President Goolsbee (2025 FOMC voter) indicating he thinks rates "will come down a fair bit more." The 10-yr yield, which was as low as 4.48% earlier, settled five basis points lower than yesterday at 4.52%. The 2-yr yield dropped one basis point today to 4.31%. 

Bonds and equities responded favorably to the release of the Personal Income and Spending Report for November. This morning's inflation readings didn't show any improvement, but importantly, the data was better than some had feared. The PCE Price Index rose to 2.4% on a year-over-year basis versus 2.3% in October, and core PCE was 2.8%, which was unchanged from October. Consensus estimates however, pegged them coming in at 2.5% and 2.9%, respectively.

Just about everything participated in upside moves in the stock market. All 11 S&P 500 sectors logged gains. Seven of the sectors climbed more than 1.0%, led by real estate (+1.8%), utilities (+1.5%), information technology (+1.5%), and financials (+1.4%).

23 of the 30 Dow components closed in the green led by NVIDIA (NVDA 134.70, +4.02, +3.1%) and UnitedHealth (UNH 500.13, +10.88, +2.2%). NIKE (NKE 76.94, -0.16, -0.2%) is among the DJIA component that closed lower after disappointing with its fiscal Q3 revenue guidance.

• Nasdaq Composite: +30.4% YTD
• S&P 500: +24.3% YTD
• Dow Jones Industrial Average: +13.7% YTD
• S&P Midcap 400: +12.3% YTD
• Russell 2000: +10.6% YTD

Reviewing today's economic data:

• Personal income increased 0.3% month-over-month in November (Briefing.com consensus 0.4%) following an upwardly revised 0.7% (from 0.6%) in October. Personal spending rose 0.4% month-over-month (Briefing.com consensus 0.5%) following a downwardly revised 0.3% increase (from 0.4%) in October. The PCE Price Index was up 0.1% month-over-month (Briefing.com consensus 0.2%); however, it ticked up to 2.4% year-over-year from 2.3% in October. The core-PCE Price Index, which excludes food and energy, also increased 0.1% month-over-month and held steady at 2.8% year-over-year.
  • The key takeaway from the report is that there wasn't any improvement in the year-over-year readings for PCE and core-PCE inflation.
• The final University of Michigan Index of Consumer Sentiment for December held steady at 74.0 (Briefing.com consensus 74.2) from the preliminary reading. In the same period a year ago, the index stood at 69.7.
  • The key takeaway from the report is the understanding that consumers are expecting future price increases for large purchases, which is driving a pickup in current buying conditions.

Looking ahead to Monday, market participants receive the December Consumer Confidence Index at 10:00 ET.