Key Inflation Rate from the Fed Declines in November; S&P Futures Recover Some Losses

The Federal Reserve's key inflation rate, known as the core PCE price index, experienced a modest increase in November, following some higher readings in previous months. As a result of this news, S&P 500 futures reduced their earlier losses, but still indicated a downward trend as trading approached Friday's opening.

The outlook for inflation remains unpredictable. Market reactions were stirred following the Federal Reserve's meeting on Wednesday, where Chairman Jerome Powell likened the "policy uncertainty" associated with the incoming Trump administration to "driving on a foggy night."

Powell advised caution, stating, "You just slow down," suggesting a slowdown in potential rate cuts.

PCE Inflation Analysis

The Personal Consumption Expenditures (PCE) price index rose by only 0.1% overall in November, falling short of the anticipated increase of 0.2%. Year-over-year, the PCE inflation rate climbed to 2.4%, up from 2.3% in October, but still under the expected 2.5% mark.

Excluding food and energy, the core PCE price index also saw a 0.1% rise, falling short of the 0.2% forecast. The Fed's crucial 12-month inflation rate remained steady at 2.8%, avoiding an expected increase to 2.9%.

Adjustments in Fed Rate-Cut Expectations

Following the PCE inflation report's release, market participants have adjusted their expectations regarding future rate cuts. Currently, there are only 11% odds priced in for a rate cut in January. However, speculation for a cut during the Fed's meeting on March 19 has increased, with probabilities rising from 49% to 54%.

S&P 500 Market Movements

As of early trading on Friday, S&P 500 futures were down by 0.5%, an improvement compared to an earlier loss of around 0.9% before the inflation data was released.

On Thursday, the S&P 500 lost some of its earlier gains, closing down 0.1%. This index has now experienced a decline of 3.4% over a three-day losing streak, marking its worst performance since early August.

Currently, the S&P 500 sits 3.7% below its all-time high recorded on December 6, although it remains up 23% for the year overall.

For daily updates on stock market trends and insights regarding implications for trading decisions, be sure to check various financial news platforms.

Fed, Inflation, S&P500