Stocks rebounded on Friday afternoon as investors failed to find a strong trend as they looked past a bleak forecast from Intel and digested a key inflation reading considered influential in the timing of a rate cut.
The S&P 500 (^GSPC) fell 0.2% after Thursday's win that saw the benchmark index close at another record high. The Dow Jones Industrial Average (^DJI) rose 0.08%, or about 30 points, while the Nasdaq Composite (^IXIC) fell 0.4%.
Technology companies lagged other indexes after Intel's ( INTC ) first-quarter outlook fell well short of Wall Street's expectations, somewhat dampening the AI-fueled hopes that helped lift stocks to record levels. Intel shares were up 10% during the afternoon, with peers AMD (AMD) and Nvidia (NVDA) taking a slight hit as well.
However, the release of the December PCE index painted a rosy inflation picture for investors. The “core” PCE rate, a measure of inflation known as the Fed’s preferred measure, fell below 3% year-on-year, the slowest growth rate since March 2021.
This number, combined with an earlier-than-expected estimate of US GDP in the fourth quarter, could reinforce the idea that the US economy is headed for a “soft landing.”
Central bankers are scheduled to meet next week for their first policy meeting this year. They are widely expected to keep interest rates steady. But the recent string of positive economic data will likely prompt them to start cutting interest rates later this year, perhaps as early as March.
Read more: What a pause on federal interest rate hikes means for bank accounts, CDs, loans and credit cards
Meanwhile, investors will analyze Friday's earnings package for more information about the health of US companies and the economy. Colgate-Palmolive (CL) was one of the most prominent companies that recorded strong results for the fourth quarter due to its consumer markets in Latin America. Visa (V) gave a tepid outlook for revenue growth as some analysts pointed to a slowdown in payments volume growth in the US that has faded heading into the new year, which could indicate an economic slowdown.
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