Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.5%), DJIA (+0.5%), and Nasdaq Composite (+0.7%) maintain solid gains as mega-cap and growth stocks provide solid leadership against a backdrop of broad participation.

Personal income increased 0.4% month-over-month in September (Briefing.com consensus: 0.4%) following a 0.4% increase in August. Personal spending jumped 0.3% month-over-month (Briefing.com consensus: 0.4%) following a downwardly revised 0.5% increase (from 0.6%) in August. Real PCE, though, was flat.

The PCE Price Index was up 0.3% month-over-month, as expected, and the core PCE Price Index, which excludes food and energy, was up 0.2% (Briefing.com consensus: 0.3%). On a year-over-year basis, the PCE Price Index was up 2.8%, versus 2.7% in August and 2.3% in April, and the core PCE Price Index was up 2.8%, versus 2.9% in August and 2.6% in April.

The key takeaway from the report is that it revealed a very sticky inflation component that remains well above the Fed's 2.0% inflation target. That likely won't prevent the Fed from cutting rates next week, but it will likely factor into a "hawkish cut," as the Fed implies it will be inclined to wait longer for the next rate cut.

The preliminary University of Michigan Consumer Sentiment reading for December increased to 53.3 (Briefing.com consensus: 52.0) from the final reading of 51.0 for November. In the same period a year ago, the index stood at 74.0.

The key takeaway from the report is its note that consumers' overall view can still be thought of as broadly somber, notwithstanding the month-over-month increase, due to the burden of high prices.