Major Averages Turning In Mixed Performance Amid Light Pre-Holiday Trading

wallstreet3 23dec22 lt

After ending the previous session sharply lower, stocks have fluctuated over the course of the trading session on Friday. The major averages have spent much of the day bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is down 11.12 points or 0.1 percent at 10,465.00, the Dow is up 130.54 points or 0.4 percent at 33,158.03 and the S&P 500 is down 13.16 points or 0.3 percent at 3,835.55.

The lackluster performance on the day comes amid light trading activity, with some traders looking to get a head start on the holiday weekend.

Traders are also digesting mixed news on the inflation front, which has led to some uncertainty about the outlook for interest rates.

Shortly after the start of trading revised data from the University of Michigan showed one-year inflation expectations fell by more previously estimated in the month of December.

The report showed one-year inflation expectations in December were downwardly revised to 4.4 percent from 4.6 percent.

One-year inflation expectations were at the lowest level in 18 months, down sharply from 4.9 percent in November.

"Declines in short-run inflation expectations were visible across the distribution of age, income, education, as well as political party identification," said Surveys of Consumers Director Joanne Hsu..

Five-year inflation expectations in December were also downwardly revised to 2.9 percent from 3.0 percent, which was unchanged from November.

Meanwhile, a closely watched Commerce Department reading on inflation showed consumer price growth slowed by more than expected in the month of November.

The reading on inflation, which is said to be preferred by the Federal Reserve, showed the annual rate of consumer price growth slowed to 5.5 percent in November from an upwardly revised 6.1 percent in October.

Economists had expected the annual rate of consumer price growth to slow to 5.3 percent from the 6.0 percent originally reported for the previous month.

Excluding food and energy prices, annual core consumer price growth slowed to 4.7 percent in November from 5.0 percent in October, in line with economist estimates.

On a monthly basis, consumer prices crept up by 0.1 percent in November after climbing by 0.4 percent in October, while core consumer prices edged up by 0.2 percent in November after rising by 0.3 percent in October.

"Inflation is trending lower, but a return to 2% inflation is far away," said Oren Klachkin, Lead U.S. Economist at Oxford Economics. "More policy tightening by the Fed early next year is likely."

Sector News

Energy stocks continue to see substantial strength on the day as the price of crude oil for February delivery surges $2.41 to $79.88 a barrel.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index and the Philadelphia Oil Service Index are up by 2.9 percent and 2.7 percent, respectively.

Natural gas stocks are also benefiting from a sharp increase by the price of the commodity, with the NYSE Arca Natural Gas Index jumping by 2.1 percent.

On the other hand, biotechnology stocks have shown a notable move to the downside, dragging the NYSE Arca Biotechnology Index down by 1.4 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.9 percent, while China's Shanghai Composite Index fell by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index dipped by 0.2 percent, the U.K.'s FTSE 100 Index and the German DAX Index inched up by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries have moved back to the downside after ending the previous session modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.8 basis points at 3.747 percent.

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