Week of 12/18-12/22 PCE Report Boosts Market, Inflation Decelerating

The S&P 500 reacted positively on Friday after November's Personal Consumer Expenditures (PCE) report came in reflecting cooler inflation data. The PCE measures consumer spending on goods and services among households in the U.S. The PCE is used as a mechanism to gauge how much earned income of households is being spent on current consumption for various goods and services. The market is set to end up the year near all-time highs due to this economic report complementing recent bullish investor sentiment from the last FED FOMC meeting where interest rates remained unchanged. Economic reports are an important factor that influence the FED's decision to act on interest rate policy, but also serve as a catalyst to drive investor confidence. The expectation from cooler inflation data is that the economy will have a soft landing as we transition to normal economic conditions. A stock market soft landing refers to a scenario where the economy transitions smoothly from a period of strong growth to a more sustainable pace, without experiencing a severe downturn. This outcome is desirable as it helps maintain stability in the stock market and avoids the negative impact of a market crash. In terms of interest rates and inflation, a soft landing typically involves a controlled adjustment of monetary policy by the central bank to manage inflationary pressures. Remember that the stock market will be closed on Monday 12/25 due to the Christmas Holiday.

Our team at Tradeknow wishes everyone a safe and happy holidays!