S&P 500 (SPY) Report – 12/22/23

Good morning, traders!

The S&P 500 ($SPY) is trading near yesterday’s close. Let’s get into it… 

It’s the last trading day before the holiday break, and investors are keenly awaiting key inflation data that could significantly influence the future of interest rate cuts and the overall direction of the market. Futures for major indexes like the Dow Jones Industrial Average and S&P 500 showed slight declines, while tech-heavy Nasdaq 100 futures remained relatively stable. Despite a recent pause, the market was still on track for an eighth consecutive week of gains, with the S&P 500 potentially reaching a new all-time high, driven by expectations of reduced borrowing costs by the Federal Reserve.

Looking ahead, the market anticipates the release of the Personal Consumption Expenditures Price Index, a critical inflation gauge. This measure was expected to show a 3.3% increase over the previous year and a 0.2% rise from the prior month. The outcome of this report could significantly impact market movements, with investors closely monitoring its implications for future interest rate decisions. Additionally, the U.S. stock market was set to be closed on the upcoming Monday for Christmas, adding to the importance of the week’s developments.

On Thursday, the stock market saw a notable recovery, offsetting the significant sell-off from the previous day. This rebound contributed to the ongoing positive trend in the market, with major indexes like the S&P 500 and Nasdaq Composite gaining over 1%. The week’s major economic highlight was the release of the Personal Consumption Expenditures Price Index, which includes the Federal Reserve’s preferred inflation measure. This data was crucial as it would influence market expectations regarding future monetary policy.

In individual stock movements, Nike’s shares dropped significantly in premarket trading due to anticipated job cuts and a forecast of declining sales, largely attributed to reduced consumer spending. This development affected other sportswear companies as well. Meanwhile, shares of major Chinese online companies, including Tencent, plummeted following the introduction of unexpected gaming regulations by Beijing, sparking concerns of a broader tech crackdown.

Friday Economic Events:
Building Permits 8:30am ET – High Volatility Expected
Durable Goods Orders 8:30am ET
PCE Index 8:30am ET – High Volatility Expected
New Home Sales 10:00am ET – High Volatility Expected
Michigan Consumer Sentiment 10:00am ET
Michigan Inflation Expectations 10:00am ET

Fed Speaker Scheduled:
No Fed Speakers Scheduled

Stock Market Holidays:
Christmas Day – December 25, 2023 – Closed
New Year’s Day – January 1, 2024 – Closed

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