Wall Street Wavers Amid Inflation Concerns and Fed Rate Projections

The S&P 500 and Nasdaq saw declines due to persistent fears of high interest rates in 2025, somewhat offset by lower-than-expected inflation data. The PCE inflation indicator increased by 2.4% annually in November. FedEx's strategic maneuvers and Eli Lilly's market performance were notable amid broader trading activity.

The S&P 500 and the Nasdaq edged lower on Friday as Wall Street grappled with looming concerns over potential high interest rates in the coming year, although losses were tempered by a softer-than-anticipated inflation report. The Commerce Department reported that the Personal Consumption Expenditure (PCE) index, a key inflation measure, grew 2.4% annually in November, slightly below forecasts of 2.5%, according to economist estimates collected by Reuters.

Following the release of the data, traders adjusted their expectations, anticipating two rate cuts in 2025, initially in March and subsequently by October. The Federal Reserve's earlier announcement, forecasting only two rate reductions in 2025 while raising inflation expectations, had jolted investors, highlighting the economy's resilience and persistent inflation concerns. "We haven't yet conquered inflation," said Mike Dickson, Horizon Investments' head of research and quantitative strategies, underscoring the report's significance.

Despite the day's market movement, individual stock actions were noticeable. FedEx gained 3% after revealing a planned separation of its freight trucking division to streamline its operations, while Eli Lilly's shares rose 6.4%, outperforming competitor Novo Nordisk's obesity drug trial results. With nearly a 2.6% dip in Tesla shares and declines in other tech giants like Nvidia and Amazon, the day illustrated the broader sector trends, while ongoing legislative struggles to prevent a government shutdown added to the market's challenges.

(With inputs from agencies.)