The core personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure, rose 3.2% year-on-year in November, indicating a larger-than-expected cooling in inflation and reinforcing market expectations for the Fed to cut interest rates next year.
U.S. stocks closed mixed before Christmas, but all three major indexes rose for the eighth straight week this week. The share price of sporting goods giant Nike "thundered" fell nearly 12%, and the company announced a cut in profit guidance, large-scale layoffs and other news.
Warren Buffett's Berkshire Hathaway spent $312.1 million between December 19 and December 21 to increase its stake in Occidental Petroleum to nearly 28 percent.
PCE data reinforces Fed rate cut expectations
On Friday, December 22, local time, the latest data from the U.S. Department of Commerce showed that the core PCE price index in November after the Fed's preferred inflation target and excluding food and energy fell to 3.2% year-on-year, with the previous value of 3.5%, lower than the market expectation of 3.3%, the lowest level since April 2021, and a month-on-month increase of 0.1%, lower than the expected 0.2%, consistent with the previous revised value.
The US PCE price index rose 2.6% year-on-year in November, below market expectations of 2.8%, and fell 0.1% month-on-month, lower than the previous value and expectations, and the first month-on-month decline since April 2020.
Industry insiders said that the core PCE price index in the United States in November slowed to 3.2% year-on-year more than expected and hit a two-year low, and the data continued to strengthen the market's expectations for the Fed to cut interest rates next year, and the expectation of a rate cut in March next year has almost been fully priced in by the market.
Traders are betting that the Fed will cut interest rates by 155 basis points for the full year of the year, double the Fed's latest forecast released last week, according to swap contracts.
The U.S. dollar index accelerated its decline after the release of the PCE data. Wind data showed that the dollar index was last reported at 101.7031 points, and the lowest was 101.4279, hitting a new low since the end of July this year. The yield on the benchmark 10-year Treasury note is also near its lowest level since July. The yield on the 10-year Treasury note rose 0.5 basis points to 3.9% on Friday, Wind data showed.
Another set of data released by the U.S. Department of Commerce showed that U.S. durable goods orders surged in November, mainly benefiting from a surge in aircraft orders. However, in a high-interest rate environment, corporate spending on equipment appears to be somewhat weak. US durable goods orders came in at 5.4% in November from the preliminary month, the largest increase since December 2022 and sharply higher than expectations of 2.4%, and the previous October value was revised upward to -5.1% from -5.4%. Orders rose 4.5% year-on-year in November.
Other data showed that the total number of new home sales in the United States in November was 590,000 on an annualized basis, the lowest since November 2022, with an expectation of 685,000 units, and the previous value was revised from 679,000 to 672,000 units.
The final value of the University of Michigan consumer sentiment index in December was 69.7, with an expectation of 69.4 and a previous value of 69.4.
U.S. stocks have eight consecutive positive weekly lines
The three major U.S. stock indexes closed mixed. Wind data showed that as of the close, the Dow fell 0.05% to 37,385.97 points, the S&P 500 index rose 0.17% to 4,754.63 points, and the Nasdaq rose 0.19% to 14,992.97 points.
Image source: Wind
It is worth mentioning that the three major U.S. stock indexes rose in early trading, and since then the gains have narrowed, and the three major indexes have all turned down at midday. S&P and Dow Jones were mainly affected by the constituent Nike, which lowered its revenue guidance for the second half of this fiscal year, planned to cut costs by $2 billion, and will lay off large-scale employees, and Nike fell more than 10%. However, boosted by PCE data to strengthen expectations of interest rate cuts, the three major stock indexes recovered most of their losses and retained the weekly rally that lasted for a month and a half.
This week, the Dow rose 0.22%, the S&P 500 rose 0.75%, and the Nasdaq rose 1.21%, all of which were eight consecutive weekly positives.
On Friday, the Nasdaq China Golden Dragon Index fell 2.16%. In terms of constituent stocks, NetEase fell more than 16%, Huya Live fell more than 11%, Sohu fell more than 8%, Gaotu Group fell more than 7%, Bilibili fell nearly 5%, New Oriental fell more than 4%, Tencent Music and Good Future fell more than 3%, Lufax Holdings, Xiaopeng Motors, Baidu fell more than 2%, JD.com, Alibaba, and Vipshop fell more than 1%, and Canaan Technology rose more than 22%.
Technology stocks mostly fell, with Apple down 0.55%, Amazon down 0.27%, Netflix down 0.99%, Google up 0.76%, Meta down 0.2%, and Microsoft up 0.28%.
Energy stocks rose collectively, with Exxon Mobil up 0.17%, Chevron up 0.21%, ConocoPhillips up 0.71%, Schlumberger up 0.93%, and Occidental Petroleum up 0.6%.
On the news side, regulatory filings disclosed on Thursday showed that Warren Buffett's Berkshire Hathaway (BRK.A.US) increased its holdings of 5.2 million shares of Occidental Petroleum (OXY.US) between December 19 and December 21, trading at a value of $312.1 million, giving it a stake in the oil company of nearly 28%.
Last week, Berkshire Hathaway bought nearly 10.5 million shares of Occidental Petroleum for about $588.7 million after Occidental Petroleum agreed to buy U.S. shale oil producer CrownRock for $12 billion.
December 25 (Monday) is the Christmas holiday in the United States, and the U.S. stock market is closed for one day. Normal trading will resume on Tuesday, December 26.
European stocks closed mixed. Wind data showed that as of the close, the German DAX index rose 0.11% to 16,706.18 points, and the French CAC 40 index fell 0.03% to 7,568.82 points.
Nike fell nearly 12%
On Friday, sporting goods giant Nike suffered a heavy setback, falling 11.83% to its latest market capitalization of $164.4 billion.
Image source: Wind
After trading on Thursday, Eastern time, Nike, the world's largest sports footwear and apparel giant, announced its second-quarter results (September-November quarter of the natural year), showing that Nike's diluted earnings per share for the quarter were $1.03, higher than analysts' expectations of $0.85, but revenue only increased slightly by 1% to $13.39 billion, less than analysts' expectations of $13.46 billion, which is already the second consecutive quarter that Nike's revenue has fallen short of expectations.
At the same time, the company also lowered its sales outlook for the second half of the fiscal year, with revenue growth likely to be only 1%, which is less than the mid-single-digit percentage of its previous estimate (about 4%-6%) and also less than analysts' estimate of 3.8%.
Nike also announced that it will restructure itself to reduce product selection, streamline management, enable more automation technology, and improve the supply chain to cut costs by $2 billion over the next three years.
Matthew Friend, Nike's chief financial officer, said on Thursday's earnings call that the new outlook reflects increased headwinds "particularly in Greater China and EMEA." He also noted that weak online store traffic, as well as the strengthening of the US dollar compared to 90 days ago, "had a negative impact on the revenue reported in the second half of the year".
Expectations of interest rate cuts continue to enhance gold's attractiveness
In commodities, expectations of Fed rate cuts continue to add to gold's appeal. After the release of the PCE data, the international gold price accelerated, and the COMEX gold futures approached a high of $2,100 per ounce. Wind data shows that on Friday, COMEX gold futures closed up 0.64% at $2064.5 per ounce, up 1.41% for the week, and COMEX silver futures closed down 0.47% at $24.47 per ounce, up 1.31% for the week.
Shi Yi, a metal analyst at Zheshang Securities, said that in the medium and long term, gold prices may be in the third round of bull market stage, and in the short and medium term, the value of gold allocation before the current round of Fed interest rate cuts is highlighted.
In terms of international crude oil, oil prices closed down for two consecutive days after Angola announced that it would withdraw from OPEC. On Friday, the U.S. oil contract for February fell 0.54% to $73.49 a barrel, while the Brent oil contract for March fell 0.34% to $78.89 a barrel, Wind data showed. In terms of weekly performance, oil prices continued to rise during the week of supply concerns caused by the Red Sea shipping crisis, with the above two contracts rising 2.88% and 3.06% respectively this week.
Argentina's largest state-owned bank received a bomb threat
According to CCTV News, on December 22, local time, the headquarters of the National Bank of Argentina in Buenos Aires, the capital of Argentina, received a bomb threat.
At noon on the same day, the 911 alarm system received an anonymous call from a man claiming that there were 3 explosives in the National Bank building, and then hung up immediately after expressing his dissatisfaction with the government.
Banco Nacional is the largest state-owned bank in Argentina and has its headquarters next to the Presidential Palace. Up to now, the police have urgently evacuated the building personnel, and the Albanian Federal Police and the explosion-proof brigade are investigating and confirming.
Reviewer: Xu Zhao Editor: Song Zhaoqing Wang Yin Signed: Peng Yong