Market participants failed to make big moves Friday as Wall Street looks ahead to next week's Federal Reserve meeting. Still, there was plenty of news hitting the wires, including the latest inflation update and another round of corporate earnings reports.
Ahead of the open, the Bureau of Economic Analysis said the Personal Consumption and Expenditures (PCE) index, the Fed's favorite inflation indicator that measures consumer spending, was up 0.2% month-over-month in December, well above the 0.1% decline from November. The 2.6% annual rise matched what was seen the month prior.
The monthly increase (+0.2%) in core PCE, which excludes volatile food and energy prices, was also higher than December, though the year-over-year rise (2.9%) was lower than than the previous month.
"Given how much inflation slowed over the last few months," a rate cut in March is not out of the question, says Bill Adams, chief economist for Comerica Bank. "But the Fed is more likely to wait until the second quarter to begin reducing interest rates."
Today's PCE data also showed that consumer spending rose 0.7% from November to December, exceeding economists' forecast for 0.5% growth. "All things considered, it's another sign that the U.S. consumer and economy are in very healthy shape going into the new year," says Craig Erlam, senior market analyst at OANDA.
Intel sheds $25 billion in market value after earnings
In single-stock news, Intel (INTC) plunged 11.9% – losing $25 billion in market value along the way – after the chipmaker disclosed its fourth-quarter results. While Intel beat on both the top and bottom lines in Q4, its first-quarter guidance came in woefully short of Wall Street's estimates.
Specifically, the company said it anticipates first-quarter earnings of 13 cents per share on revenue ranging between $12.2 billion and $13.2 billion. Analysts, meanwhile, forecast earnings of 33 cents per share on $14.2 billion in sales.
In the company's earnings call, Intel CEO Pat Gelsinger cited "discrete headwinds" such as Mobileye Global's (MBLY, +1.5%) "sharp inventory correction" as reason for the lower guidance, but said these will likely be "temporary." Intel is the majority owner of Mobileye, which makes chips and software that enable autonomous driving capabilities and advanced driver assistance systems (ADAS).
Intel was one of the best Dow Jones stocks of 2023, second only to Salesforce (CRM, +0.3%). It's down 13% so far in 2024, behind only Boeing (BA, +1.8%) and its 21% decline as the worst Dow stock of the year.
Other big earnings movers included American Express (AXP), which jumped 7.1% after the credit card giant gave upbeat full-year guidance, and Colgate-Palmolive (CL), which gained 2.0% after the consumer products company reported a top-line beat.
At the close, the Dow Jones Industrial Average was up 0.2% at 38,109, while the S&P 500 (-0.07% at 4,890) and the Nasdaq Composite (-0.4% at 15,455) were modestly lower.
Fed, Big Tech earnings on deck
This upcoming week could be a volatile one. In addition to the next Fed meeting, the December jobs report is due out Friday morning.
Plus, Big Tech dominates the earnings calendar, with Alphabet (GOOGL, +0.2%) and Apple (AAPL, -0.9%) among those reporting.
