US stocks ended the week on a mainly positive note, winning the week for the eighth time in a row. The Federal Reserve’s preferred inflation index, which revealed price pressures continued to moderate in November and are getting closer to the Fed’s 2% objective, sealed the week’s gains.
On Friday, the Dow Jones Industrial Average (^DJI) fell less than 0.1%, barely above the flatline. Both the tech-heavy Nasdaq Composite (^IXIC) and the benchmark S&P 500 (^GSPC) increased by around 0.2%. The S&P 500 climbed 0.75%, the Dow increased a more moderate 0.2%, and the Nasdaq gained 1.2% for the week.
Prices excluding the volatile categories of food and energy increased 3.2% from a year earlier in November, according to a new reading on the Personal Consumption Expenditures Price Index released on Friday morning. This is a decrease from October’s revised annual gain of 3.4%. An annual gain of 3.3% was anticipated by analysts.
Jennifer Schonberger of Yahoo Finance pointed out on Friday that this data probably makes it easier for the central bank to lower interest rates in 2019.
Nike (NKE) shares fell about 12% in one-day trading after the firm said it would reduce staffing levels and predicted a decline in revenue as a result of lower consumer spending. As a result of its sales projection reduction, shares of rival sportswear manufacturers dropped.
James Gorman sent a positive message to the market during his last few days as CEO of Morgan Stanley: things are going to become really exciting.
According to Gorman, global markets will increase if investors have faith that the Federal Reserve has completed its campaign of interest rate tightening. The interview was published in the global Times on Friday.
The recent shock of the rate hike has hindered capital market and banking transactions. And the reason for it is that, according to Gorman, the FT, “nobody really knows what their cost of financing is.”
Ted Pick, a co-president of Morgan Stanley, will take over as CEO once Gorman steps down on January 1.
The cryptocurrency market is back, riding a fresh upswing that bulls believe will push values further higher in the next year.
The world’s largest cryptocurrency, bitcoin (BTC-USD), has increased in value by almost 160% this year after briefly hitting $44,000 for the first time since early 2022. According to David Hollerith of Yahoo Finance, the market value of all cryptocurrency assets has nearly quadrupled to roughly $1.7 trillion, while the stock of cryptocurrency exchange Coinbase (COIN) has more than tripled.
According to Coinbase CEO Brian Armstrong, “I think what people are reacting to this year is crypto is here to stay,” as reported by Yahoo Finance.
One of the most unexpected market stories of 2023 was the industry’s resurgence, coming after an incredible collapse in 2022 that destroyed many investors and brought down some of the largest names in the field.
The bull argument for 2024 is that, with the guilty plea from Binance CEO Changpeng Zhao and the criminal conviction of FTX founder Sam Bankman-Fried, many of the largest issues facing the cryptocurrency industry are now formally in the past.
Investors believe Washington will soon provide greater regulatory clarity and acceptability for this sector. They anticipate that a number of spot bitcoin exchange-traded funds (ETFs) will be approved by authorities in January, enabling regular people to gain exposure to the cryptocurrency without having to purchase any.
The estimate of no growth that was originally believed to exist was reduced to a GDP loss of 0.1%. The likelihood of the UK entering a recession, which is often defined as two consecutive quarters of negative economic growth, has increased as a result of the negative adjustment.
The services sector’s estimate worsened, falling by 0.2 in the third quarter of the year instead of the prior estimate of 0.1%, which led to the downgrade. The fact that officials also reduced their estimate of the second quarter’s GDP overall is much more concerning. It was expected to have increased by 0.2 earlier. There is no growth in the new figure.
According to a recent poll conducted by executive outplacement company Challenger, Grey, and Christmas, 34% of companies have decided not to give incentives this year. This is a higher percentage than the 27% of businesses that did not provide incentives in 2022, and it is the biggest since 36% of businesses chose not to do so in 2019.
The information is derived from a November poll that received responses from slightly over 200 businesses. Additionally, according to Challenger, 15% of businesses are reducing the value of bonuses, up from 11% the previous year.
Businesses’ year-end strategies are aligned with their belief that growth would slow down in 2024. Businesses are making cuts where they can as they are hiring less often and employees are more likely to stay in their positions. According to Andrew Challenger, senior vice president of Challenger, recruiting and keeping employees is not as important as it was in 2021 and 2022.
The Federal Reserve stated earlier this month that it sees a decline ahead, despite the fact that economic growth this year has been higher than many had predicted. This holiday season, employees at Hasbro, Amazon, Citigroup, Spotify, and other companies have been laid off.
The Federal Reserve is extremely likely to start decreasing rates as early as March, according to Jamie Cox, managing partner at Harris Financial Group, who noted that price hikes slowed down last month.
Following the publication of fresh PCE data on Friday, he said in a note, “Disinflation is in the data now, and that is wildly positive for the economy and the market.”
Even if inflation measurements are still on the decline, they are still far higher than the Federal Reserve’s 2% objective. As a matter of fact, Fed Chair Jerome Powell has openly rejected requests for the central bank to modify its inflation objective in order to account for the peculiarities of the present economy, stressing that 2% inflation will finally be achieved.
The 3.2% print, according to NorthEnd Private Wealth’s chief investment officer Alex McGrath, is less indicative of the impending rate reduction that the market is anticipating. He stated on Friday, “Looking at the durable goods orders that came in wildly above expectations, this especially comes into focus.” According to him, if the Fed starts lowering rates and the economy never slows down enough to completely eradicate inflation, it might spark a new round of inflation.
However, 3.2% is a win for a Federal Reserve that is still very focused on restoring price stability without jeopardising the health of the labour market, thereby balancing its two objectives, according to Quincy Krosby, chief global strategist at LPL Financial, who made this statement in a note on Friday.