Stocks bounced around Friday afternoon as investors failed to find strong direction as they looked past a gloomy outlook from Intel and digested a key inflation reading seen as influential in the timing of an interest rate cut.
The S&P 500 (^GSPC) fell 0.2% after a winning Thursday saw the benchmark close at another record high. The Dow Jones Industrial Average (^DJI) increased 0.08% or about 30 points, while the tech-heavy Nasdaq Composite (^IXIC) slid 0.4%
Techs lagged behind the other indexes after Intel’s (INTC) first quarter outlook fell well short of Wall Street expectations, somewhat denting the AI-fueled hopes that have helped lift stocks to record highs. Intel shares 10% during afternoon trading, with peers AMD (AMD) and Nvidia (NVDA) also taking a slight knock.
The release of the PCE index for December painted a rosy inflation picture for investors, however. “Core” PCE, the inflation gauge commonly known as the Fed’s preferred measure, fell below 3% on an annual basis, the slowest rate of growth since March 2021.
That number, combined with a hotter-than-expected early estimate on fourth quarter US GDP, could further the notion that the US economy is headed for a “soft landing.”
Central bankers will huddle next week for their first policy meeting of the year. They are widely expected to keep interest rates steady. But the latest string of positive economic data will likely prompt them to begin cutting rates later this year, perhaps as early as March.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
At the same time, investors will parse Friday’s batch of earnings for more insight into the health of corporate America and the economy. Colgate-Palmolive (CL) was a highlight, posting strong fourth quarter results attributed to its Latin American consumer markets. Visa (V) gave a tepid revenue-growth forecast with some analysts pointing to a slowdown in US payments volume growth that faded heading into the new year, which could indicate an economic slowdown.
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Read More: Stocks wobble as investors embrace optimistic inflation data