US STOCKS-Wall Street turns negative ahead of long holiday weekend

Karuna Therapeutics

22/12/2023 19:40

* 
      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 down: Dow 0.28%, S&P 0.11%, Nasdaq 0.12%
    

  
 (Updates to 14:28 EST)
    By Stephen Culp
       NEW YORK, Dec 22 (Reuters) - 
    U.S. stocks reversed earlier gains on Friday as investors
took a breather ahead of 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 lower as the afternoon progressed,
after an initial rally on data showing that inflation is inching
closer to the U.S. central bank's target.
    Small caps handily outperformed the broader market, with the
Russell 2000  .RUT  last up 0.6%.
    All three indexes are on track for 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 will mark 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 key question becomes whether there will be lingering
(economic) damage from the rate of interest rate hikes that
we've already done," Green said. Conversely, if the Fed cuts
rates too soon it "risks reigniting inflationary forces in the
economy," he added.
    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.
    At 2:28 p.m. ET, the Dow Jones Industrial Average  .DJI 
fell 103.91 points, or 0.28%, to 37,300.44, the S&P 500  .SPX 
lost 5 points, or 0.11%, at 4,741.75 and the Nasdaq Composite
 .IXIC  dropped 17.31 points, or 0.12%, to 14,946.56.
    Nike  NKE.N  tumbled 11.9% after the sportswear maker
trimmed its annual sales forecast due to cautious consumer
spending.
    Nike peers Lululemon Athletica  LULU.O , Foot locker  FL.N 
and Dick's Sporting Goods  DKS.N  dipped between 3.0% and 1.3%.
    Occidental Petroleum  OXY.N  rose 0.8% 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 47.1% 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
2.99-to-1 ratio; on Nasdaq, a 2.18-to-1 ratio favored advancers.
    The S&P 500 posted 39 new 52-week highs and no new lows; the
Nasdaq Composite recorded 166 new highs and 52 new lows.  

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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;))