U.S. stocks rebound on cooler inflation, but end week lower due to Fed rate cuts

From Nasdaq: 2024-12-20 17:28:18

U.S. stocks rallied on Friday, with the Dow rising 1.18%, S&P 500 gaining 1.09%, and Nasdaq climbing 1.03%. The Personal Consumption Expenditure (PCE) index rose 2.4% annually in November, easing inflation concerns. Despite the rebound, all three major indexes closed the week lower due to the Federal Reserve’s announcement of fewer projected rate cuts in 2025.

Real estate led Friday’s gains, with the sector advancing 1.8% as Treasury yields declined. Markets anticipate the Fed’s first 2025 rate cut in March, followed by another in October. Congress is working to avert a government shutdown before a midnight deadline. Investors are monitoring fiscal policy and tariff decisions under Trump’s incoming administration.

The rally reflects market sensitivity to inflation data and Federal Reserve commentary, highlighting the balancing act between rate policy and economic resilience. Real estate stocks and small caps benefited from declining yields, but broader weekly losses indicate lingering concerns about fiscal and monetary uncertainty. Traders will watch fiscal negotiations and inflation trends for insights into 2025 market dynamics.



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