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

Karuna Therapeutics

22/12/2023 21:29

* 
      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
    

        * 
      Indexes: Dow off 0.05%, S&P up 0.17%, Nasdaq gains 0.19%
    

  
 (Updates with closing prices)
    By Stephen Culp
       NEW YORK, Dec 22 (Reuters) - U.S. stocks gyrated to a
mixed close on Friday as investors headed into the 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 in light trading as
the afternoon progressed, after an initial rally on data showing
inflation is easing closer to the U.S. central bank's target.
    The Nasdaq  .IXIC  joined the S&P 500  .SPX  in positive
territory, while the blue-chip Dow  .DJI  finished nominally
lower.
        "Some traders are willing to back away late on a Friday
in order not to be exposed over a long weekend, and we are in a
period of heightened geopolitical risks," said Tim Ghriskey,
senior portfolio strategist Ingalls & Snyder in New York. "But
most traders are investors are in the market because this has
been a huge rally."
  
    Small caps handily outperformed the broader market, with the
Russell 2000  .RUT  ending up 0.8%.
    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 Ghriskey. "Some call for that to
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.
    The Dow Jones Industrial Average  .DJI  fell 18.38 points,
or 0.05%, to 37,385.97, the S&P 500  .SPX  gained 7.88 points,
or 0.17%, at 4,754.63 and the Nasdaq Composite  .IXIC  added
29.11 points, or 0.19%, at 14,992.97.
        Of the 11 major sectors in the S&P 500, consumer
discretionary  .SPLRCD  was the sole loser, while consumer
staples  .SPLRCS  enjoyed the largest percentage gain.
  
        Nike  NKE.N  tumbled 
    11.8
    % after the sportswear maker 
    trimmed
     its annual sales forecast due to cautious consumer
spending. Its peers Foot locker  FL.N  and Dick's Sporting Goods
 DKS.N  shed 2.7% and 3.9%, respectively.
  
        Karuna Therapeutics  KRTX.O  soared 
    47.7
    % in the wake of Bristol Myers Squib's  BMY.N  
    agreement
     to acquire the drugmaker for $14 billion in cash.
  
    Advancing issues outnumbered decliners on the NYSE by a
2.25-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers.
        The S&P 500 posted 39 new 52-week highs and no new lows;
the Nasdaq Composite recorded 176 new highs and 64 new lows.  
  
        Volume on U.S. exchanges was 9.63 billion shares,
compared with the 12.52 billion average for the full session
over the last 20 trading days.
  

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Inflation gauges    https://tmsnrt.rs/3TGGxah
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 (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;))