Closing Stock Market Summary
The market saw mixed action at the index level on the final session of the week on below-average volume at the NYSE. Weakness in the semiconductor space and losses in some mega cap stocks weighed on the S&P 500 (-0.1%) and Nasdaq Composite (-0.4%) while the Dow Jones Industrial Average (+0.2%) and Russell 2000 (+0.1%) closed with slim gains.
The soft showing from semiconductor-related names followed disappointing guidance from Intel (INTC 43.65, -5.90, -11.9%) and KLA Corporation (KLAC 599.37, -42.32, -6.6%). The PHLX Semiconductor Index (SOX) dropped 2.9% today.
Also, the three weightiest S&P 500 constituents -- Microsoft (MSFT 403.93, -0.94, -0.2%), Apple (AAPL 192.19, -1.98, -1.0%), and NVIDIA (NVDA 610.31, -5.86, -1.0%) -- closed with declines and weighed over the broader market.
The S&P 500 also ran into resistance above the 4,900 level, again, which coincided with the major indices pulling back from session highs.
The overall vibe, though, was more positive as investors digested some pleasing data in terms of ongoing strength in the economy and cooling inflation. Advancers had a 4-to-3 lead over decliners at the NYSE and an 11-to-10 lead at the Nasdaq.
Namely, the December Personal Income and Spending report showed strong consumer spending while inflation moved closer to the Fed's 2.0% target. Pending home sales were also much stronger than expected in December.
A big earnings-related gain in American Express (AXP 201.43, +13.36, +7.1%) also supported an underlying positive bias today. This price action also contributed to the gain the S&P 500 financial sector (+0.3%). Other sectors that outperformed the index include the energy (+0.8%), health care (+0.6%), and consumer discretionary (+0.6%) sectors.
Meanwhile, the heavily-weighted information technology sector was the worst performer by a wide margin, dropping 1.1%.
Treasuries settled with losses in response to this morning's data. The 10-yr note yield rose three basis points to 4.16% and the 2-yr note yield rose four basis points to 4.36%.
- Nasdaq Composite: +3.0%
- S&P 500: +2.5%
- Dow Jones Industrial Average: +1.1%
- S&P Midcap 400: -0.6%
- Russell 2000: -2.4%
Reviewing today's economic data:
- Personal income increased 0.3% month-over-month in December, as expected, but personal spending increased a much stronger-than-expected 0.7% (consensus 0.4%). The inflation gauges were spot-on with expectations. The PCE Price Index was up 0.2% month-over-month and so was the core-PCE Price Index, which excludes food and energy. With the December changes, the PCE Price Index was up 2.6% year-over-year, unchanged from November, and the core PCE Price Index was up 2.9% -- the lowest since March 2021 -- versus 3.2% in November.
- The key takeaway from the report should be more Goldilocks than anything else: consumer spending is strong and core inflation, which the Fed is targeting, is moving toward the 2.0% target.
- Pending home sales jumped 8.3% in December (consensus 2.3%) following a revised 0.3% decline in November (from 0.0%).
Looking ahead, there is no US economic data of note on Monday.