Dow futures soared more than 100 points in response to expectations that The US will release the Personal Consumption Expenditure (PCE) Price Index, which indicates that inflation has peaked.
As of 6:03 p.m. Thai time, the Dow Jones futures rose 135 points, or 0.41%, to 33,343 points.
The US Commerce Department will release the PCE index today, with analysts expecting the PCE index to indicate that inflation has peaked.
Analysts surveyed expect the headline PCE index, which includes food and energy, up 5.5 percent in November from a year earlier. slowing from 6.0% in October.
Month-on-month, the PCE headline index is expected to rise 0.1% in November from 0.3% in October.
In addition, the underlying PCE index, which excludes the food and energy sectors, It is the gauge of inflation that the Federal Reserve (Fed) cares about. It is expected to rise 4.7 percent in November year over year. slowing from 5.0% in October.
Month-on-month, the core PCE index is expected to rise 0.2% in November, unchanged from October.
The PCE index is a gauge of inflation that can detect changes in consumer behavior. and covers prices for goods and services more broadly than the Consumer Price Index (CPI) data from the U.S. Department of Labor.
Trading on Wall Street has entered the end of the year. With just one week left to close 2022 amid expectations that the market sentiment will continue to stagnate into the new year.
Analysts expect the US stock market to perform poorly this year. It will mark its biggest year-on-year drop since 2008 after three consecutive years of gains. The Dow is now down 4.5% since early December. The S&P 500 and Nasdaq fell 6.3% and 8.7% respectively.
Wall Street will be closed on Monday, Dec. 26 for Christmas. As a result, today marks the start of the “Santa Rally,” which typically lasts for seven days, taking place over the last five days of the current year as well as the first two days of the new year.
However, many analysts agree that the “Santa Rally” may not happen on Wall Street this year. Amid concerns that the US Federal Reserve (Fed) moving forward to raise interest rates will drag the US economy into recession.
“We haven’t seen any signs of Santa coming this year. The market is full of bad news. And the Fed won’t take action until February next year. and even if the market recovers But it won’t fully offset the negative from last week,” said Louis Navellier, founder of Navellier & Associates.
Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, said the Fed’s tight monetary policy is hampering the “Santa Rally” this year.
“The Fed is blocking the way for Santa’s sleigh,” Jablonski said.
Ms Jablonski stated that Fed Chairman Jerome Powell’s statement sent a strong and clear signal. He has no plans to slow down. Or deviate from the Fed’s interest rate hike.
“The Fed will raise interest rates higher and longer. and monetary policy will be tighter than expected While the market will be pressured for a longer time from the Fed’s policy. Despite the temporary rebound in response to the previous CPI numbers, the Fed’s stance will expose the market to near-term volatility,” Jablonski said.
Chris Larkin, analyst at Morgan Stanley said “We are entering the end of the year. And investors have been waiting for the phenomenal ‘Santa Rally’, but now the market is steadily falling. Investors expect that slowing inflation may cause the Fed to slow down on rate hikes, which will support the market. But the Fed and Powell continued to raise interest rates and signal further increases. which worries investors.”
Ed Moya, senior market strategist at Oanda, said: “The Fed is rigorous in monetary policy. It raised interest rates to 4% within nine months, increasing the risk of a recession. while Mr. Powell signals further rate hikes.”
The Federal Open Market Committee (FOMC) unanimously raised the short-term interest rate by 0.50% to a range of 4.25-4.50% at its meeting this month. which is the highest level in 15 years.
In their policy interest rate expectations (Dot Plot), Fed officials expect to continue to raise interest rates in 2023 and not cut rates until 2024, when the Fed raises interest rates to the highest level. 5.1% next year, above market expectations. and will maintain the interest rate at that level for a period of time to keep an eye on the impact of tightening monetary policy on the US economy