Stocks experienced a rise on Friday following the release of the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, which showed a decline for the first time since 2020 in November. The Nasdaq and the S&P 500 traded about 0.2% higher, while the Dow Jones Industrial Average inched up 0.1%. The PCE Price Index rose 2.6% in the twelve months through November, the lowest reading since February 2021. Excluding volatile food and energy prices, the index rose 3.2%, slightly below economists’ predictions. The report indicated a slowing pace of core inflation, aligning with the Fed’s 2% goal next year.
Dow component Nike (NKE) saw a significant decline of more than 10% after revising its full-year outlook, projecting sales growth of just 1% this year, down from a prior estimate of mid-single-digit growth. The year-end rally in stocks resumed following positive GDP and unemployment data, suggesting a soft landing for the U.S. economy.
Simulation software developer Ansys (ANSS) became the best-performing stock in the S&P 500 after reports surfaced that the company was considering a sale following interest from at least one potential buyer. Ansys shares jumped nearly 17% at the open, reaching a two-year high, before settling at about a 9% increase in midday trading.
The PCE price index drop, combined with strong income and spending in November, signals a potential soft landing for the U.S. economy. The core PCE’s slower growth may boost confidence in the effectiveness of the Fed’s anti-inflation rate hikes, possibly leading to the anticipated interest rate cuts in the coming year.
