US STOCKS-S&P 500 ends higher ahead of long holiday weekend

Karuna Therapeutics

22/12/2023 21:00

* 
      November PCE cooler than expected
    

        * 
      Durable goods orders surprise to the upside
    

        * 
      Nike dives after annual sales forecast cut
    

        * 
      Karuna climbs on Bristol Myers $14 bln buyout
    

  
 (Updates to market close)
    By Stephen Culp
       NEW YORK, Dec 22 (Reuters) - 
    U.S. stocks gyrated to a mixed close on Friday as investors
headed into the long Christmas holiday weekend, having digested
cooler-than-expected inflation data which firmed bets for
Federal Reserve interest rate cuts in the new year.
    All three indexes turned less decisive as the afternoon
progressed, after an initial rally on data showing that
inflation is easing closer to the U.S. central bank's target.
    Small caps handily outperformed the broader market, with the
Russell 2000  .RUT  ending sharply higher.
    All three indexes notched their eighth consecutive weekly
gains, the longest weekly winning streak for the S&P 500 since
late 2017.
    For the Nasdaq and the Dow, it marks the longest streak of
consecutive weekly gains since the beginning of 2019.
    The S&P 500 is now within 1% of its record close reached in
January 2022. Should it close above that level, that will
confirm the benchmark index has been in a bull market since
bottoming in October 2022.
    "In the context of what we've seen on a year-to-date basis,
it's actually pretty extraordinary what we've seen in the fourth
quarter," said Michael Green, chief strategist at Simplify Asset
Management in New York. "Small caps continue their absolute
tear."
        "The Russell 2000  .RUT  has gone from being down on the
year as of August to now being up 15.6% for the year," Green
said. "This truly has become an 'everything' rally."
  
    A swath of data was released on the last trading day before
the long weekend, notably the Commerce Department's Personal
Consumption Expenditures (PCE) report, which showed inflation
continues to meander down toward the Fed's average annual 2%
target.
    A separate report showed new orders for core capital goods
landed well above analysts' expectations, an upside surprise
that bodes well for U.S. corporate spending plans.
    Together, they reinforce the conviction that not only will
the central bank begin cutting interest rates as early as March
2024, but it might pull off reining in inflation without tipping
the economy into recession, a "soft landing."
    "The PCE report was very dovish, the topline number showed
deflation for the month, it was very positive and perhaps a step
toward lowering rates," said Tim Ghriskey, senior portfolio
strategist Ingalls & Snyder in New York. "Some call for that
happen in March we think that's overly optimistic."
        "The economy is strong," Ghriskey added. "It doesn't
need lower rates at the moment."
  
    Financial markets are pricing in a 74.1% likelihood that the
Fed will implement a 25 basis point rate cut in March, according
to CME's FedWatch tool.
    According to preliminary data, the S&P 500
 .SPX  gained 8.41 points, or 0.18%, to end at 4,755.16 points,
while the Nasdaq Composite  .IXIC  gained 28.96 points, or
0.19%, to 14,992.82. The Dow Jones Industrial Average
 .DJI  fell 13.54 points, or 0.04%, to 37,395.09.
    Nike  NKE.N  tumbled after the sportswear maker trimmed its
annual sales forecast due to cautious consumer spending.
    Occidental Petroleum  OXY.N  rose after Warren Buffett-led
Berkshire Hathaway  BRKa.N  raised its stake in the oil company,
bringing it closer to 28%.
    Karuna Therapeutics  KRTX.O  soared in the wake of Bristol
Myers Squib's  BMY.N  agreement to acquire the drugmaker for $14
billion in cash.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Inflation gauges    https://tmsnrt.rs/3TGGxah
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Stephen Culp; Additional reporting by Johann M
Cherian, Shristi Achar A in Bengaluru and Richard Chang)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))