Wall St rises after soft inflation data; Nike slides
By Johann M Cherian and Shristi Achar A
(Reuters) -Wall Street's main indexes gained on Friday after a key inflation reading came in softer than expected, boosting recent investor optimism that the Federal Reserve could lower borrowing costs next year.
The personal consumption expenditures (PCE) price index, considered to be the Fed's preferred inflation gauge, climbed 2.6% in November on an annual basis, compared with expectations of a 2.8% rise, per economists polled by Reuters.
The core inflation figure, which excludes volatile food and energy components, rose 3.2% on a yearly basis, compared with an estimated 3.3% rise.
«3.2% represents a victory for a Fed that remains keenly focused on restoring price stability without damaging a still healthy labor market, in essence balancing its two mandates,» said Quincy Krosby, chief global strategist for LPL Financial (NASDAQ:LPLA).
Analysts also said light trading volumes ahead of the Christmas break could also impact moves during the day.
Traders see an 85.5% chance of at least a 25 basis point (bps) rate cut in March next year, and expect borrowing costs to be lower by 125 bps in September 2024, according to the CME FedWatch Tool.
The S&P 500 and the Nasdaq finished over 1% higher on Thursday after data signaled third-quarter U.S. economic growth was not as robust as originally stated, bringing the benchmark index within a whisker of its record closing high.
All three indexes are poised for their eighth-straight week in the green, with the S&P 500 set for its longest weekly winning streak since 2017, and the Nasdaq and the Dow since 2019.
The rally gained momentum last week after the central bank acknowledged that inflation was nearing the target rate, bringing interest
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