Investing.com — The Dow Jones ended a rough patch with strong gains on Friday, a day after its longest losing streak since 1974, as cooler-than-expected inflation data eased concerns that the Federal Reserve could become even more aggressive next year.
At 4:00 PM ET (21:00 GMT), the stock rose 497 points, or 1.2%, but ended the week lower after dropping 1,100 points earlier in the week. The index gained 1.1% and the index rose 1.1%.
PCE cooler than expected
Treasury yields fell after data showed inflation cooled in November, easing investor fears of an even more hawkish Federal Reserve next year.
The widely watched publication, the Fed’s favorite inflation gauge, rose 2.4% annually in November, compared with estimates of 2.5%. On a monthly basis it rose only 0.1%.
Excluding volatile food and energy components, core PCE rose 2.8%, compared with estimates of 2.9%.
This release allayed some of the concerns as upside risks to inflation were back on the Fed’s radar, with US consumer prices rising by the most in seven months in November, and the potential for Donald’s new administration Trump to approve trade and tax policies that many see as inflationary.
“[W]We believe that the annual rate of core PCE will resume its downward trend in the first quarter of 2025 and that the Fed will therefore cut by 25 bps in March 2025.” Morgan Stanley (NYSE:) said in a recent note.
FedEx will spin off freight operations
In business news, FedEx (NYSE:) shares flattened gains after the delivery giant reported better-than-expected earnings in its fiscal second quarter while also announcing it plans to divest its freight business.
Nike (NYSE:) Shares fell 0.2% after the sportswear retailer noted “serious issues” in its guidance, despite second-quarter results beating expectations.
Novo Nordisk A/S (NYSE:) fell more than 17% after results from a late-stage study showed the manufacturer’s weight-loss drug fell short of expectations.
A US government shutdown is looming
The threat of a US government slowdown was raised on Thursday after a Republican bill that included Donald Trump’s demands for higher government spending and an increased debt ceiling was rejected in a vote in the House of Representatives, with several Republican senators also openly opposing the elected defied the president. .
The new bill replaced a bipartisan agreement to authorize government spending after Trump and tech billionaire Elon Musk spoke out against the old deal.
The government funding expires at midnight Friday, marking the start of a partial government shutdown that could disrupt operations ranging from border security to travel. The disruption is expected to be particularly severe due to increased holiday travel trends.
A government shutdown brings a new layer of uncertainty for Wall Street, which has already suffered sharp losses since earlier this week after the Federal Reserve cut rates but has signaled a significantly slower pace of rate cuts in 2025.
(Peter Nurse, Ambar Warrick contributed to this article.)
