U.S. stocks pulled back on Wednesday as investors digested new economic data, which suggested that inflation progress remains slow, leaving the Federal Reserve’s 2% target still a distant goal.
The S&P 500 (^GSPC) declined by about 0.4%, while the Dow Jones Industrial Average (^DJI) slipped 0.3%. The Nasdaq Composite (^IXIC), which is heavily weighted toward technology stocks, dropped approximately 0.6%.
The market mood was subdued ahead of the Thanksgiving holiday, with U.S. markets closing Thursday and trading early on Friday. Investor attention briefly shifted back to the Federal Reserve after being somewhat overshadowed by discussions surrounding President-elect Donald Trump’s trade policy and Cabinet appointments.
The latest data on inflation revealed that the core Personal Consumption Expenditures (PCE) index, which excludes food and energy costs and is closely watched by the Fed, rose 0.3% in October compared to the previous month. This matched Wall Street’s expectations, but the data also raised questions about the Fed’s ability to reach its long-term 2% inflation target. Over the past year, core prices increased by 2.8%, slightly higher than the 2.7% seen in September but still above the Fed’s target.
Market expectations for the Fed’s December policy meeting show a roughly 34% chance that the central bank will pause interest rate hikes, up from 24% a month ago, according to the CME FedWatch Tool.
In addition to inflation concerns, the government released its second estimate of third-quarter GDP, confirming that the U.S. economy grew at an annualized rate of 2.8% during the period. Meanwhile, weekly jobless claims continued to trend downward, with 213,000 claims filed in the week ending November 23, a slight drop from the previous week’s total of 215,000.
On the corporate front, earnings reports from major companies weighed on investor sentiment. Dell Technologies (DELL) shares plunged more than 12% after the company reported weaker-than-expected quarterly revenue, driven by declining demand for personal computers. Hewlett-Packard (HPQ), Dell’s peer, also saw its stock fall over 11% following a disappointing earnings report.
In the political arena, President-elect Trump on Tuesday named Jamieson Greer, a veteran of his first term, as the new U.S. trade representative. Greer’s role in Trump’s original China tariffs has sparked renewed interest in how his appointment might influence the administration’s stance on tariffs, particularly against key trading partners like China, Mexico, and Canada.
As markets approach the holiday break, the outlook remains clouded by economic data, corporate earnings, and the potential impact of Trump’s trade policies.
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