Stock Market Update

The S&P 500 futures are up 26 points and are trading 0.4% above fair value, the Nasdaq 100 futures are up 145 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are 91 points and are trading 0.2% above fair value.

Personal income increased 0.4% month-over-month in December, as expected, following a 0.3% increase in November. Personal spending jumped 0.7% month-over-month (Briefing.com consensus 0.5%) on the heels of an upwardly revised 0.6% increase (from 0.4%) in November.

The PCE Price Index rose 0.3% month-over-month, as expected, leaving it up 2.6% year-over-year versus 2.4% in November. The core-PCE Price Index increased 0.2% month-over-month, as expected, leaving it up 2.8% year-over-year for the third month in a row.

The key takeaway from the report is that consumer spending is strong (which we knew from the Adv. Q4 GDP report) and that inflation is sticky above the Fed's 2% target, making it clear why the Fed said it isn't in a hurry to adjust its policy stance.

The Q4 Employment Cost Index showed compensation costs for civilian workers increased 0.9% (Briefing.com consensus 0.9%), seasonally adjusted, for the three-month period ending in December 2024 versus 0.8% for the third quarter.

The key takeaway from the report is that compensation costs moderated to 3.8% for the 12-month period ending in December 2024 from 4.2% for the 12-month period ending in December 2023.