The main U.S. stock index rose for the fourth day in a row at the end of trading on December 5: it approached the all-time record, which was set in October, but has not yet broken it. Investors decided not to make big bets in anticipation of the Federal Reserve's interest rate decision next week, Bloomberg explained.
Details
- The broad market index S&P 500 rose by 0.19% to 6870.4 points in trading on December 5. This is 0.3% less than the closing record set on October 28. After falling on Monday, the index rose for the fourth day in a row.
- The Nasdaq Composite Technology Sector Index added 0.31% on Friday.
- The blue-chip index Dow Jones Industrial Average rose by 0.22%.
- The Russell 2000 index of small-cap stocks was down 0.38% after hitting an all-time high at the close a day earlier.
- The yield on U.S. government bonds has risen: for example, on ten-year bonds it reached 4.14%, Bloomberg writes.
- The value of bitcoin has fallen below $90,000 again. The token lost 3% over the day and cost about $89,400, CoinGecko service shows.
- For the week, the S&P 500 gained 0.3%, while the Nasdaq and Dow added nearly 1% and 0.5%, respectively. The Russell 2000 rose by 1% over the week.
What influenced the stock
On Friday, the long-awaited personal consumption expenditure statistics for September, the PCE index, were released: on a core basis (excluding volatile energy and food prices) , it was up 2.8% compared to the same month last year. That's below the Dow Jones forecast (2.9%), CNBC notes. The release of the data was delayed due to a record government shutdown. In addition, the University of Michigan's December consumer sentiment index came in above expectations, providing insight into the current sentiment and inflation expectations of the population.
The PCE index, the Fed's preferred inflation gauge, was the last price data the regulator will receive before the rate vote at the December 9-10 meeting. With inflation moderating, the focus remains on employment data, with recent reports signaling signs of a weakening labor market. Investors are hoping that this will prompt the Fed to cut the benchmark rate by a quarter point, CNBC notes.
According to the CME FedWatch tool, traders estimate the probability of a quarter percentage point rate cut next Wednesday at 87%, up significantly from two weeks ago.
Netflix shares showed high volatility at the trading on Friday: at the beginning of the day they were significantly declining after the announcement of the deal on the purchase of movies and streaming assets of Warner Bros. At the end of the day Netflix lost 2.9% of its value. Netflix shares retreated slightly from the day's lows after a White House official told CNBC that the Trump administration was "skeptical" of the deal.
Investor optimism for tech stocks was supported by news of strong sales at Hon Hai Precision Industry (Foxconn), a partner of Nvidia, Bloomberg reports.
What the analysts are saying
"Overall, the macro data are consistent with another 25 basis point cut in the Fed Funds rate next week, but they don't indicate a need for the Fed to accelerate the pace of cuts in 2026," Jan Lingen of BMO told Bloomberg.
A December rate cut is not a guaranteed outcome either, Rick Reeder, director of global bond market investments at BlackRock, noted on Bloomberg Television. He said he expects disagreement among Fed governors at the next meeting Dec. 9-10.
"I think the September data solidifies what the market is already laying down: near certainty of a rate cut next week," David Krakauer, vice president at Mercer Advisors, told CNBC. - If inflation continues to be relatively moderate and potentially declining, what is the outlook for further rate cuts early next year?" According to Krakauer, a rate cut may not be a new catalyst for the market. That said, he believes stocks still have upside potential - at least enough for the S&P 500 Index to set a new high. "Growth could be smooth or volatile, but I definitely see a positive trajectory for stocks," he said.
This article was AI-translated and verified by a human editor
