Broad stock measures are trying for a third straight day of gains as volumes continue to thin heading into the Christmas holiday. Vulnerability was apparent when equity futures trimmed gains following a string of mixed economic data on inflation and big-ticket spending. Then again, the broader market largely shrugged off Tuesday’s potentially bearish economic data to drive leading stock indexes higher into the close (figure 1).
Oil prices continued their near-term recovery, likely a boon to stock gains. Crude futures were up nearly 2% to $36.82 a barrel in U.S. trading. Oil isn’t expected to make up a lot of ground any time soon, say most industry analysts. But for those who appreciate the long, long-term view, the Organization of the Petroleum Exporting Countries said in its closely watched annual World Oil Outlook it expects the price of crude to rise to $70 a barrel in 2020 and $95 a barrel in 2040.
Fed Justification? This morning’s income and spending report includes an inflation sub-index. In fact, the Federal Reserve has oft said it’s this report’s personal consumption expenditure (PCE) index that is the central bank’s preferred inflation reading over the consumer price index. The PCE rose 0.4% from November 2014 to November 2015, marking the largest 12-month gain since the end of last year. The cost of large household expenses including rent and medical care are driving the increase, the government’s report showed. The Fed wants inflation to rise closer to its 2% annual rate target. Now, the core PCE index that excludes food and energy has climbed 1.3% in the same span, unchanged from the prior month.
Durable Goods Resoundingly Flat. Flat is good? Well, it could have been worse, the bulls will say. Flat November big-ticket orders follow a 2.9% increase in October, slightly better than Street economists expected. The number would have been sharply negative save for Pentagon demand.
Mixed Retail Picture. Nike (NKE) was a pre-market gainer after its late Tuesday results showed a rise in revenue and profit. Bed Bath & Beyond (BBBY) shares fell after the home goods retailer cut its guidance.
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