US stocks diverged Wednesday as investors digested fresh data that showed inflation made little progress toward the Fed’s 2% target in October.
After clinching record highs on Tuesday, the S&P 500 (^GSPC) fell about 0.2%, while the Dow Jones Industrial Average (^DJI) rose around 0.3%. The tech-heavy Nasdaq Composite (^IXIC) was down about 0.7%.
The mood is muted in the wind-down to the Thanksgiving holiday, which will see markets shut on Thursday and close early on Friday. But the Fed is taking the fore again after being eclipsed somewhat by the debate over the impact of President-elect Donald Trump’s tariff plans and Cabinet choices.
The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases were flat in October from the prior month, raising questions over whether progress in getting to the central bank’s 2% goal has stalled.
The core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month during October, in line with Wall Street’s expectations for 0.3% and the reading from September. Over the prior year, core prices rose 2.8%, in line with Wall Street’s expectations but above the 2.7% seen in September.
Traders currently see a roughly 34% chance the Fed holds rates steady at that meeting, up from about 24% a month before, per the CME FedWatch Tool.
Also out Wednesday, the second estimate of third-quarter GDP was unchanged, showing the US economy grew at an annualized rate of 2.8% in the period. Meanwhile, weekly jobless claims continued to move lower with 213,000 unemployment claims filed in the week ending Nov. 23, down from 215,000 the week prior.
On Tuesday, Trump tapped Jamieson Greer, a veteran of his first term, as a US trade representative. Given Greer was heavily involved in Trump’s original China tariffs, Wall Street is assessing what his role could mean for the big new tariffs promised for the US’s top trading partners.
On the corporate front, Dell (DELL) shares sank over 10% after quarterly revenue fell short amid flagging PC demand. Peer HP’s (HPQ) stock also fell post-earnings, also down over 10%.
