New York Stock Market Shows Mixed Early Trading as PCE Meets Expectations

The three major indices of the U.S. New York stock market showed mixed trends near the opening, hovering around flat, as investors monitored inflation indicators that met expectations and remarks from Federal Reserve (Fed) officials on November 30 (local time), the last trading day of November.

At around 10:30 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was up 0.74% from the previous close, trading around 35,691 points. The S&P 500, which is centered on large-cap stocks, rose 0.04% to 4,552 points. The tech-heavy Nasdaq index recorded a 0.31% decline to 14,212 points.

Currently, within the S&P 500, energy, materials, industrials, and financial stocks are rising, while communication, technology, utilities, and consumer discretionary stocks are falling. Salesforce rose more than 7% from the previous close, buoyed by better-than-expected earnings and an upward revision of its annual guidance. Snowflake is up more than 4% on expectations of future revenue growth. Leading semiconductor stocks Nvidia and AMD both showed declines in the 1% range. Tesla is trading slightly lower ahead of its Cybertruck delivery event.

Investors are trying to gauge the future monetary policy stance through economic indicators released that day, such as the Personal Consumption Expenditures (PCE) price index and initial jobless claims, as well as remarks from Fed officials. The core PCE price index for October, a preferred inflation gauge of the Fed, rose 3.5% year-over-year, meeting Wall Street expectations. It also increased 0.2% month-over-month, in line with forecasts.

Jay Woods, Global Chief Strategist at Freedom Capital Markets, told CNBC, "Price movements are positive," adding, "Economic indicators support the Fed's likelihood of holding off on rate hikes and possibly cutting rates, providing a tremendous tailwind." The October personal consumption expenditures increased 0.2% month-over-month, matching expert forecasts (0.2%), but considering the 0.7% rise in September, it suggests a slowdown in consumption. The October existing home sales index fell 1.5% month-over-month and 8.5% year-over-year, marking the lowest level since the data began being compiled.

The Beige Book, the Fed's economic report released the previous afternoon, included an analysis that overall economic activity, including consumer spending which accounts for two-thirds of the U.S. economy, has slowed. Sales declines were confirmed mainly in discretionary items and durable goods, indicating a pronounced consumption slowdown in the fourth quarter.

Weekly initial jobless claims came in below expectations. According to the U.S. Department of Labor, claims for the week of the 19th to the 25th totaled 218,000, an increase of 7,000 from the previous week. However, continuing claims for unemployment benefits, which count those filing for benefits for two weeks or more, rose by 86,000 to 1,927,000.

The market still holds expectations for rate cuts next year. According to the CME Group's FedWatch tool, federal funds futures on that day priced in more than a 75% probability that the Fed will cut rates by at least 0.25 percentage points in May next year. Although slightly weaker than the previous day, the market still strongly anticipates a rate cut in May.

However, cautionary voices regarding inflation continue from Fed officials. John Williams, President of the Federal Reserve Bank of New York and considered the third most influential Fed official, said in his opening remarks during a speech that "it is appropriate to maintain a restrictive stance for a considerable period to bring inflation back to the 2% price stability target." He also added that current rates are at a high level and inflation is expected to decline going forward.

Investors are closely watching the discussion scheduled for the next day with Fed Chair Jerome Powell, who will participate in a conversation and panel discussion in Atlanta. Quincy Crosby, strategist at LPL Financial, said, "The PCE shows easing inflationary pressures," but added, "It remains uncertain whether the Fed will declare victory."

In the New York bond market, the 10-year U.S. Treasury yield rose slightly to around 4.33%. The 2-year yield, which is sensitive to monetary policy, traded around 4.70%. The dollar index, which measures the value of the U.S. dollar against six major currencies, rose more than 0.5% to about 103.33.

European stock markets are rising on news of easing inflation in the Eurozone. Germany's DAX index rose 0.29%, the UK's FTSE index gained 0.63%, and France's CAC index increased 0.6%.