Overnight – Stocks manage a positive day after tough week
Equities wrapped up a difficult with strong gains Friday, a day after snapping its longest losing streak since 1974 as cooler-than-expected inflation data eased concern that the Federal Reserve could turn even more hawkish next year.
Treasury yields fell after data showing that inflation cooled in November, eased investor fears of an even more hawkish Federal Reserve next year. The widely-watched PCE price index release, the Fed’s preferred inflation gauge, rose 2.4% in November on an annual basis, compared with estimates of 2.5%. On a monthly basis, it rose just 0.1%. Excluding volatile food and energy components, the core PCE rose 2.8%, compared with estimates of 2.9%. This release calmed some concerns as upside risks to inflation were back on the Fed’s radar, with US consumer prices increasing by the most in seven months in November, and the potential for the new Donald Trump administration to authorise trade and tax policies that many see as inflationary.
The threat of a US government slowdown was raised Thursday after a Republican bill that included Donald Trump’s demands for higher government spending and a raised debt ceiling was rejected in a vote in the House of Representatives, with several Republican senators also openly defying the President-elect.
The new bill replaced a bipartisan deal to approve government spending, after Trump and tech billionaire Elon Musk came out in opposition of the old deal.
Government funding is set to expire at midnight on Friday, marking the beginning of a partial government shutdown that could disrupt operations ranging from border security to travel. The disruption is expected to be particularly dire amid increased travel trends during the holiday season.
A government shutdown presents another layer of uncertainty for Wall Street, which was already nursing steep losses from earlier this week after the Federal Reserve cut interest rates but flagged a substantially slower pace of rate cuts in 2025.
Company News
- FedEx stock gave up gains flat after the delivery giant reported better-than-expected earnings in the fiscal second quarter, while also announcing that it’s planning on spinning off its freight business.
- Nike stock fell 0.2% after the sportswear retailer flagged “severe issues” in its guidance, despite second-quarter results topping expectations.
- Novo Nordisk – fell more than 17% after results from a late-stage study showed the drugmaker’s weight-loss drug fell short of expectations.
ASX SPI 8079 (+0.16%)
Entering full holiday mode this week, we are likely to see some stocks whipsawing in light volume.
The recovery in US stock on Friday may see some positivity, however the poor weekly performance may mean some take it as an opportunity to sell into strength & take profits from 2024
