US stock markets saw a decline on Wednesday as investors processed fresh data indicating little progress toward the Federal Reserve’s 2% inflation target in October.
Following record highs on Tuesday, the S&P 500 (^GSPC) dropped by approximately 0.4%, while the Dow Jones Industrial Average (^DJI) fell about 0.3%. The Nasdaq Composite (^IXIC), heavily weighted in technology stocks, saw a decline of roughly 0.6%.
The market’s subdued mood comes ahead of the Thanksgiving holiday, with markets closed on Thursday and a shortened trading day on Friday. Attention has shifted back to the Federal Reserve after a period of focus on President-elect Donald Trump’s tariff proposals and Cabinet appointments.
The latest data from the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, showed that price increases remained stagnant in October compared to the previous month. This raises questions about whether progress toward the central bank’s 2% inflation goal has stalled. The core PCE index, which excludes volatile food and energy costs, increased by 0.3% from September, in line with Wall Street’s expectations. On a year-over-year basis, the core PCE index rose 2.8%, matching forecasts but slightly above the 2.7% increase recorded in September.
Traders are now pricing in a 34% chance that the Fed will keep interest rates unchanged at its upcoming meeting, an increase from 24% a month ago, according to the CME FedWatch Tool.
In other economic news, the second estimate of third-quarter GDP growth remained unchanged, with the US economy expanding at an annualized rate of 2.8%. Additionally, weekly jobless claims continued to trend lower, with 213,000 claims filed for the week ending November 23, down from 215,000 the previous week.
On the corporate front, Dell Technologies (DELL) saw its shares tumble over 12% after its quarterly revenue fell short of expectations due to weak PC demand. HP (HPQ), a major competitor, also saw its stock drop by more than 11% following disappointing earnings results.
As the Thanksgiving holiday approaches, investors are keeping a close eye on both economic data and corporate earnings as they navigate a potentially volatile end to the year.
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