Wall Street choppy post inflation data, energy shares jump
Investors have been jittery since last week as the Fed remains stubbornly committed to achieving the 2% inflation goal and projected it would continue raising rates to above 5% in 2023
Wall Street's main indexes swung between gains and losses in thin pre-holiday trade on Friday as investors assessed fresh inflation data, while energy shares jumped on higher oil prices.
A Commerce Department report showed U.S. consumer spending barely rose in November, while inflation cooled further, but not enough to discourage the Federal Reserve from driving interest rates to higher levels next year.
The personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 0.1% last month after climbing 0.4% in October.
"If we got consistent data that inflation was decreasing, then people would have more confidence in a stronger equity market," said Peter Andersen, founder of Andersen Capital Management in Boston.
"By the end of the first or mid-second quarter, I would expect the Fed to stop raising rates and start to declare a modest victory over this battle against inflation and then the markets will rally."
A benchmark survey showed U.S. consumers expect price pressures to moderate notably in the next year, with the one-year inflation outlook dropping to the lowest in 18 months in December.
Energy shares spearheaded gains among the major S&P 500 sectors, led by a more than 2% rise in Exxon Mobil Corp and Chevron Corp as oil prices gained following Moscow's plans to cut crude output.
Wall Street indexes sold off sharply on Thursday after data indicated a resilient American economy, fueling worries that the central bank could keep hiking rates for longer.
Both the benchmark S&P 500 and tech-heavy Nasdaq were on track for their worst December showing since 2018.
Market participants stuck to their expectations of a 25-basis point rate hike by the Fed in February, but see the terminal rate hitting 4.9% in May 2023 versus 4.8% before the data on Friday.
Investors have been jittery since last week as the Fed remains stubbornly committed to achieving the 2% inflation goal and projected it would continue raising rates to above 5% in 2023, a level not seen since 2007.
The S&P 500, with a near 20% fall this year, is on track for its biggest yearly decline since the 2008 financial crisis. The Nasdaq has shed over 33% this year and the Dow Jones Industrial Average 9%.
At 11:38 a.m. ET, the Dow was up 72.89 points, or 0.22%, at 33,100.38, the S&P 500 was up 8.51 points, or 0.22%, at 3,830.90, and the Nasdaq Composite was down 19.61 points, or 0.19%, at 10,456.51.
Tesla Inc's shares touched a fresh two-year low in volatile trading as boss Elon Musk's promise to not sell his shares for at least two years did little to reassure investors.
Dow Jones parent News Corp gained 1.9% on a report that billionaire businessman Michael Bloomberg was interested in acquiring either Dow Jones or the Washington Post.
Advancing issues outnumbered decliners for a 1.46-to-1 ratio on the NYSE and a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and one new low, while the Nasdaq recorded 29 new highs and 145 new lows.
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