Wall Street stocks closed higher on Friday, injecting a bit of much-needed holiday cheer after investors scoured fresh data for clues to the Federal Reserve’s likely thinking.
The benchmark S&P 500 erased earlier losses to end up 0.6 percent, eventually dragging the Nasdaq Composite with it. The heavy technology index closed 0.2 percent higher. Volumes were generally light as the end of the year holidays started in earnest.
However, Friday’s gains weren’t enough to stop either of the two benchmarks closing down for the third week in a row – their first consecutive losing streak since September. With just four trading days left in 2022, the S&P 500 and the Nasdaq Composite this year have lost about 20 percent and 33 percent, respectively, putting them on course for their worst performance since the 2008 financial crisis.
Elsewhere, the FTSE All World Stock Index has lost about a fifth of its value this year, while the Bloomberg General Index of the global bond market is down about 16 percent.
“The past two weeks have been mostly languid defiance of fatalism and half-hearted optimism,” said Mike Zygmunt, head of trade and research at Harvest Volatility Management. “It’s a strange psychological state and that market amazes me [and] Investors need to rest.”
Treasury bonds fell, pushing yields on the benchmark 10-year note to 3.75 percent – their highest level this month. The two-year Treasury yield rose 0.06 percentage point to 4.33 percent. Debt markets were closed early on Friday for the holiday.
Data earlier in the day showed US consumer income flat in November but spending slowed slightly, mostly in line with economists’ expectations. The report’s inflation figures were also in line, showing the core PCE price index – the Fed’s preferred measure of price pressures – rising 0.2 percent month-on-month in November.
The annual rate of growth for the core gauge slowed to 4.7 per cent in November from 5 per cent the previous month.
Combined with a larger-than-expected decline in orders for long-term durable goods, the reports provided “further evidence that [US] “The economy has lost momentum,” said Andrew Hunter, US economist at Capital Economics.
Slowing growth may encourage the Fed to adjust its plans to tighten monetary policy further. Policymakers raised interest rates by half a percentage point in December, after four consecutive increases of 0.75 percentage points. However, the central bank has also been clear that it plans to raise interest rates to just over 5 percent next year, from the current target range of 4.25 percent to 4.5 percent, with no rate cuts until 2024.
Currency markets were largely range-bound on Friday, leaving the dollar down 0.1 percent against a basket of six other international currencies, but up 9 percent for the year.
Oil prices rose, with international benchmark Brent crude rising 3.7 percent to $83.97 a barrel.
Elsewhere in stock markets, Hong Kong’s Hang Seng Index fell 0.4 percent, China’s CSI 300 Index fell 0.2 percent, South Korea’s Kospi Index fell 1.8 percent, and Japan’s Topix lost 0.5 percent.
The Stoxx Europe 600 regional index was flat and the FTSE 100 in London ended the half-day UK trading session marginally higher.
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