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Stocks reel as investors embrace optimistic inflation data

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Shares rallied through Friday afternoon as investors ignored Intel's bleak outlook and failed to see strong direction as they digested key inflation indicators that could influence the timing of interest rate cuts.

The S&P 500 (^GSPC) fell 0.2% after Thursday's win saw the benchmark close at another all-time high. The Dow Jones Industrial Average (^DJI) rose 0.08%, or about 30 points, while the tech-heavy Nasdaq Composite Index (^IXIC) fell 0.4%.

Tech stocks lag behind other indexes after Intel's (INTC) first-quarter outlook fell sharply below Wall Street expectations, as hopes fueled by the AI ​​that has propelled stocks to record highs. Slightly damaged. In afternoon trading, Intel's share was 10%, with peers AMD (AMD) and Nvidia (NVDA) also falling slightly.

However, the release of the PCE index in December painted a rosy picture of inflation for investors. Core PCE, a measure of inflation commonly known as the Fed's preferred measure, fell below 3% annually, its slowest growth rate since March 2021.

The numbers, combined with a better-than-expected preliminary report on fourth-quarter U.S. GDP, could further strengthen the view that the U.S. economy is headed for a “soft landing.”

Central bankers are scheduled to meet next week for their first policy meeting of the year. Policy interest rates are widely expected to remain stable. But a recent set of positive economic data means it is likely to start cutting rates later this year, perhaps as early as March.

read more: Impact of the Fed's interest rate hike suspension on bank accounts, CDs, loans, and credit cards

At the same time, investors will parse Friday's set of results for further insight into the health of U.S. companies and the economy. Colgate-Palmolive (CL) reported strong fourth-quarter results, highlighted by strong consumer markets in Latin America. Visa (V) has given a lukewarm sales growth forecast, with some analysts saying the slowdown in U.S. payments volume growth is slowing into the new year, which could signal an economic slowdown. Pointed out.

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  • Stocks were mixed in afternoon trading.

    Stocks posted initial losses and later mixed results Friday afternoon as investors sought to hedge against some lackluster earnings while embracing the latest inflation indicators that show price pressures continue to ease. I had a hard time finding a clear direction.

    The S&P 500 (^GSPC) fell below the flatline but was set for a winning week. The Dow Jones Industrial Average (^DJI) rose 0.1%, or about 44 points, while the tech-heavy Nasdaq Composite Index (^IXIC) fell 0.3%.

  • Elon Musk's AI startup aims to raise up to $6 billion: report

    Elon Musk is ramping up efforts to develop AI technology outside of his all-electric car company.

    Musk's artificial intelligence startup xAI is in talks to raise up to $6 billion at a proposed valuation of $20 billion, according to a new report in the Financial Times published Friday.

    The fundraising effort comes as many in the technology industry scramble to quickly develop new generative AI tools and capture market share in a nascent field believed to revolutionize economic life. Ta.

    The startup has been courting investors around the world in recent weeks, including a Hong Kong family office, the report said, citing people familiar with the matter. But the report says raising funds in areas increasingly controlled by the Chinese government poses regulatory issues as the U.S. government seeks to tighten export controls to limit China's ability to develop advanced technology. He pointed out that there is a possibility.

    The report comes amid pressure from Musk to give Tesla more control over the company, either by increasing its stake or by granting it a new class of super-voting shares. . Musk said he is reluctant to help Tesla become a leader in the AI ​​field without having much influence over the company's decisions. He threatened to take his vision for AI and robotics development outside the company if his demands for greater influence were not granted.

  • Stock prices rise in morning trading

    Here are some of the leading stocks on Yahoo Finance. trend ticker Page during Friday morning trading:

    Intel (INTC): The company's stock fell more than 10% Friday morning after the company released first-quarter guidance that fell short of Wall Street expectations. The sell-off accelerated even as the company posted overall better earnings for the fourth quarter of 2023, with revenue of $15.4 billion and adjusted earnings per share of $0.54.

    American Express: (AXP): The financial services company reported Friday that revenue rose more than 11% from a year earlier to $15.8 billion, an 8% increase but slightly short of expectations of $15.9 billion. CEO Stephen Squeri told Yahoo Finance Live that the devaluation of the Argentine peso was a contributing factor.

    Spirit Airlines (keep): Shares of JetBlue Airways (JBLU) fell as much as 17% Friday morning after the company told the low-cost airline it may seek to terminate its merger agreement. JetBlue Airways shares rose more than 2% after the airline received a warning that said certain conditions required in the agreement may not be met.

    visa(V): The payment card service company fell 1% after reporting its first-quarter results, revealing that revenue significantly exceeded profits of $8.6 billion against expectations of $8.57 billion, compared to the same period last year. recorded a profit of nearly 9%. Year. Some analysts pointed to forward guidance as a reason for the stock price decline. Growth in U.S. payments slowed throughout the quarter, which could signal an economic slowdown.

  • Easing inflation strengthens the “if, but when” story of Fed rate cuts

    The Fed's ongoing public debate over when to begin its monetary easing cycle comes as the central bank's preferred inflation measure fell below 3% for the first time since March 2021, before the aggressive rate hike campaign began. It got even more intense on Friday.

    The personal consumption expenditure (PCE) index in December increased by 2.6% year-on-year, consistent with last month's print results. “Core” PCE, which excludes the volatile food and energy sectors, rose 2.9%, down from 3.2% a month earlier and below the 3.0% expected by economists polled by Bloomberg.

    Quincy Crosby, chief global strategist at LPL Financial, said there remains hope that the Fed will discuss “not when” to start cutting rates at its next policy meeting.

    Markets had largely expected the first rate cut to take place in March. However, many Fed officials are putting the brakes on this theory. They stepped up their data-driven strategy and postponed any major decision to start cutting interest rates in favor of waiting for further confirmation that inflation was fully contained.

    Inflation pressures continue to normalize, with “core” numbers inching closer to the Fed's 2% target, but the Fed will continue to monitor the impact of increased consumer spending coupled with promises of fiscal stimulus on the rise in inflation. “We're going to do it,” Crosby said. .

    As of Friday morning, traders were predicting a 47% chance the Fed would cut interest rates at its March meeting. This increases the probability of a rate cut in May to nearly 90%.

  • Spirit shares fall as JetBlue warns merger deal may be terminated on Sunday

    Shares of Spirit Airlines (SAVE) fell as much as 17% on Friday morning after JetBlue Airways (JBLU) told the low-cost airline that its merger deal could be terminated on January 28th.

    JetBlue Airways shares rose more than 2% after the airline received a warning that said certain conditions required in the agreement may not be met. The Long Island City, New York-based company said it will continue to evaluate its options under the agreement.

    The development makes Spirit Airlines' $3.8 billion sale to JetBlue (JBLU) less likely to go through after a court ruling last week blocked the merger citing antitrust concerns.

    Both companies subsequently filed an appeal of the federal judge's ruling.

    On Friday morning, Spirit pushed back against JetBlue's warning, saying there was “no basis” to terminate the merger agreement. The company said it will continue to abide by the agreement and “expects JetBlue to do the same.”

  • Stocks were mixed in morning trading.

    Intel (INTC)'s pessimistic outlook sparked Friday morning as investors take stock of the latest optimistic inflation numbers and how they will affect the timing of the Fed's first interest rate cut of the cycle. The stock prices were mixed.

    The S&P 500 (^GSPC) rose 0.1% after Thursday's win saw the benchmark close at another all-time high. The Dow Jones Industrial Average (^DJI) was little changed, while the tech-heavy Nasdaq Composite Index (^IXIC) was down 0.2%.

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