U.S. stocks ended Friday’s session with minimal changes as investors cautiously awaited the Federal Reserve’s final policy meeting of the year, set for next Wednesday.
The S&P 500 closed nearly flat, slipping just 0.16 points to 6,051.09, ending the week down 0.6% and snapping a three-week winning streak. Meanwhile, the Dow Jones Industrial Average fell 0.2%, or 86 points, to 43,828.06, marking its seventh consecutive daily decline—the longest losing streak since 2020. For the week, the Dow dropped 1.8%, its sharpest weekly loss since October. In contrast, the Nasdaq edged up 0.12% on Friday to 19,926.72, securing a modest 0.3% weekly gain despite retreating from its all-time high earlier in the week.
Fed Meeting Looms Amid Inflation Concerns
The Federal Reserve’s policy meeting on Wednesday will likely determine whether the short-term benchmark interest rate will see a quarter-point cut to a range of 4.25%-4.5%, a move widely anticipated by markets with a 97% probability, according to the CME FedWatch tool. However, the outlook for 2024 remains uncertain after recent inflation data sparked caution among economists.
“Improvements in inflation appear to have stalled,” noted Diane Swonk, chief economist at KPMG.
Inflation Data Signals Challenges
Annual consumer inflation rose 2.7% in November, the steepest increase since July, while core inflation, which excludes volatile food and energy prices, remained steady at 3.3%. Both figures remain above the Fed’s 2% target.
Further signs of inflationary pressure were evident in wholesale prices. Annual wholesale inflation climbed to 3% in November, or 3.5% when excluding energy and food—the highest levels since February 2023.
Treasury Yields Climb Higher
Government bond yields rose for the fifth straight session, reflecting persistent inflation concerns. The 10-year Treasury yield exceeded 4.4%, while the 2-year yield reached 4.247%, marking their highest levels in recent weeks.
Big Tech Powers Through
Despite inflation worries, tech giants such as Apple, Nvidia, Microsoft, Amazon, Meta, Alphabet, Broadcom, and Tesla continued their upward momentum. Several hit record highs this week, with Tesla marking its first record close in over three years.
Broadcom was a standout performer, with shares surging over 24% on Friday after the company forecast significant growth in demand for AI-powered chips. CEO Hock Tan projected the AI market could represent a $60 billion to $90 billion revenue opportunity by 2027—over four times its current size. Broadcom’s upbeat first-quarter revenue forecast further fueled optimism, elevating its valuation to a trillion dollars.
As markets tread cautiously, all eyes remain on the Fed’s next move and its implications for 2024.
