Stocks fall, heading for third straight week of losses

US stocks extended their losses on Friday morning as a vicious bout of selling that has plagued the month continued ahead of the long holiday weekend.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^ DJI) each sank 0.5% after fighting for direction at the open. The high-tech Nasdaq Composite (^IXIC) fell 0.9%.

The US stock and bond markets will be closed on Monday, December 26, in observance of Christmas Day. Bond markets will close an hour earlier than usual on Friday at 2 pm ET.

The underlying PCE price index: the Fed Preferred Inflation Measure – rose in a 5.5% annual in November and 0.1% from the previous month, on par with the consensus estimates of economists surveyed by Bloomberg. The figurative marked a moderation of the readings of 6.1% and 0.3%, respectively, in October.

Core PCE, which excludes the volatile food and energy components, rose 4.7% year-on-year and 0.2% month-on-month.

Meanwhile, personal spending stalled in November at the weakest reading since July.

Investors will also get readings on the latest University of Michigan Consumer Sentiment Survey and new home sales.

“The Federal Reserve’s preferred measure of inflation continues to decline, which is good news for its most important target, but unfortunately for the market, it is happening at the same time that consumers continue to cut spending,” said independent adviser Alliance Chief Investment. Officer Chris Zaccarelli said in a note.

He added: “At this point, the market has been cornered, as more robust spending and higher growth are indirectly bad for the stock market (because they are likely to trigger an even stronger Fed hawkish reaction), whereas slower spending and growth is directly bad for the stock market, because it means lower corporate profits.”

after the fed final political decision of 2022 last week, strategists noted that the most surprising data point among officials’ economic projections was an upward revision of their base PCE expectations to 3.5% from the previous 3.1% at the end of 2023. This suggested to many analysts that the Federal Reserve will need to keep rates at a high terminal rate through 2023.

“We expect the Fed to revise its forecasts lower as soon as March, although progress will initially be slow; policymakers seem to have been scarred by the experience of the past year and a half and will want to be sure they aren’t lowering their numbers prematurely.” “Pantheon chief macro economist Ian Shepherdson said in a note. “Markets will not wait.”

NEW YORK, NEW YORK - DECEMBER 21: People walk past the New York Stock Exchange during afternoon trading on December 21, 2022 in New York City.  Stocks closed strong today for the second day in a row with the Dow Jones closing up over 500 points amid a better-than-expected report on consumer confidence from the Conference Board.  (Photo by Michael M. Santiago/Getty Images)

NEW YORK, NEW YORK – DECEMBER 21: People walk past the New York Stock Exchange during afternoon trading. (Photo by Michael M. Santiago/Getty Images)

Friday’s moves come after a brutal previous trading day which saw the S&P, Dow and Nasdaq post losses of 1.4%, 1% and 2.2%, respectively. Investors were spooked by a warning from chipmaker Micron Technology about the semiconductor industry and strong data from the job market and consumer spending that confirmed the outlook for “higher for longer” interest rates.

Oil prices rose on Friday and headed for a big weekly gain as investors waited for a drop in Russian crude supply. That helped calm concerns about a drop in US transportation fuel demand ahead of a winter storm moving closer to North America. West Texas Intermediate (WTI) crude futures, the US benchmark, were up 2% at $79 a barrel.

US Treasury yields rose while the US dollar index fell against a basket of other currencies.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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