Opening Comment — Friday, December 20, 2024
DJIA: 42,342.24, up 15.37
S&P 500: 5,867.08, down 5.08
NASDAQ: 19,372.77, down 19.92
Stocks lower ahead of PCE deflator data release
Stock futures are lower Friday morning ahead of today’s personal income, personal spending, and Personal Consumption Expenditures (PCE) deflator (the Federal Reserve’s [Fed’s] preferred gauge of inflation) data for November. Concerns of a government shutdown heightened following a temporary funding bill that included less riders and a two-year suspension of the debt ceiling failed to pass in the House of Representatives. As of 7:19 AM ET, the Dow is decreasing 0.6%, while the S&P 500 is down 1.1%. The Nasdaq 100 is falling 1.6% relative to fair value on the GLOBEX.
U.S. equities were mostly lower on Thursday as the final reading on third-quarter gross domestic product growth was revised higher to a strong 3.1% annualized pace off stronger-than-initially-forecasted consumer spending growth, which was revised higher to an annualized 3.7%. Both initial and continuing jobless claims came in under forecasts, while existing home sales picked up more than projected. The Dow was little changed, while the tech-heavy Nasdaq Composite fell 0.1%. The S&P 500 decreased 0.1% with seven of 11 sectors finishing in negative territory. The Utilities sector was the top performer, rising 0.5%, while the Real Estate sector was the bottom performer, falling 1.7%.
On the data front, personal income is expected to have increased 0.4% month-over-month (MOM) in November, versus the prior month’s 0.6%, while personal spending is expected to have increased 0.5% MOM in November compared to the prior month’s 0.4%. The PCE deflator for November is expected to have risen 0.2% MOM, similar to the prior month’s change, and accelerate to 2.5% year-over-year (YOY) from the prior month’s 2.3%. Meanwhile, the core PCE deflator for November is expected to have increased 0.2% MOM, slower than the prior month’s 0.3%, but accelerate to 2.9% YOY from the prior month’s 2.8%. The finalized reading of consumer sentiment from the University of Michigan is expected to come in at 74.2 versus the prior reading of 74.0, while one-year and 5-10-year inflation expectations are projected to remain steady at 2.9% and 3.1%, respectively.
Across the pond, European stocks are lower in mid-day trading as the U.K.’s retail sales came in weaker-than-expectations. Both Germany’s and France’s Producer Price Indexes accelerated from the prior month.
Overnight in Asia, stocks were lower following Japan’s national Consumer Price Index accelerating materially from the prior month, with the headline and core readings at 2.9% and 2.4% YOY, respectively.
In FOREX trading, the dollar is lower though still near the highest level since 2022 following higher U.S. rate expectations.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 1.2% lower at $68.52/barrel.
In the metals complex, gold is 0.5% higher at $2604.90/ounce following a weakening dollar.