Stocks rally after inflation data but close lower for the week

STORY: After a bumpy week for stocks, Wall Street’s main indexes ended Friday with gains after cooler-than-expected inflation data eased worries about the path of interest rates.

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The Dow, S&P 500 and Nasdaq all added more than one percent.

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The personal consumption expenditures or PCE price index showed a 2.4% rise in the annual inflation rate for November, below economists’ estimates.

The report came after the Fed on Wednesday forecast just two interest rate cuts for 2025, sparking a sharp sell-off… with equities unable to bounce back on Thursday.

Alexander Morris is CEO and CIO of F/m Investments.

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“Today stocks are getting a little bit of reprieve after a fairly difficult week, largely led by Jay Powell, reminding markets and incoming presidents alike that he and the Fed are in charge and they’re going to do what they think is best for the economy. [FLASH] I think the Fed is signaling very strongly to us that data dependency means really paying attention to inflation. We’d thought the shift had been made just to the jobs market. The Fed had been vocal about that. But now we hear Fed Governor Hammack making very clear that this could also be an inflation story for 2025. So data dependency really is the Fed paying attention to everything all at once.”

Stocks on the move Friday included Novo Nordisk, which shed nearly 18% after the company revealed disappointing results in a late-stage trial for its experimental next-generation obesity drug CagriSema.

On the flipside, shares of Eli Lilly rose after the Food and Drug Administration approved its weight-loss treatment, Zepbound, for obstructive sleep apnea, making it the first drug green-lit to directly treat patients with the common sleeping disorder.

Despite Friday’s stock gains, the Nasdaq snapped a four-week winning streak, the S&P suffered its biggest weekly percentage decline in six weeks, and the Dow saw its third consecutive weekly fall.