In a tumultuous day on Wall Street, stocks exhibited a rollercoaster ride before settling into a mixed landscape, leaving investors on edge as they grappled with a pivotal inflation report ahead of the Federal Reserve’s looming meeting on the future of interest rates.
The S&P 500 (^GSPC), fresh off its record-setting performance on Thursday, flirted with the flatline but managed to clinch a weekly victory. Meanwhile, the Dow Jones Industrial Average (^DJI) eked out a 0.2% gain, or 60 points, while the Nasdaq Composite (^IXIC) experienced a nearly 0.4% decline.
The technology sector bore the brunt of the market’s volatility, as Intel (INTC) delivered a first-quarter outlook that fell significantly short of Wall Street expectations. The AI-driven aspirations that have propelled stocks to historic highs took a hit, with Intel’s shares plummeting nearly 12%. Peers AMD (AMD) and Nvidia (NVDA) also experienced a minor setback in the wake of Intel’s disappointing forecast.
The release of the Personal Consumption Expenditures (PCE) index for December provided additional evidence that inflation is showing signs of moderation. The “core” PCE, considered the Federal Reserve’s preferred measure of inflation, dipped below 3% on an annual basis, marking the slowest growth rate since March 2021.
This inflation data, coupled with a stronger-than-anticipated early estimate for fourth-quarter US GDP, could bolster the belief that the US economy is on track for a “soft landing.” As central bankers convene for their first policy meeting of the year next week, the prevailing expectation is that they will maintain interest rates at their current levels. However, the recent string of positive economic indicators may prompt them to signal potential rate cuts later in the year, possibly as early as March.
The delicate balancing act faced by Federal Reserve officials becomes increasingly apparent in light of the robust economic growth figures. Initiating an easing cycle too soon could reignite inflationary pressures, underscoring the fine line policymakers must tread in steering the economy toward stability. As the markets grapple with economic uncertainties, the week’s tumultuous trading paints a vivid picture of a mixed landscape for stocks, where optimism and caution converge, leaving investors on the edge of their seats.
Source: Yahoo Finance
