Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed in green territory ahead of the weekend.
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The market got a boost after September’s core Personal Consumption Expenditures (PCE) index rose by 2.8% year-over-year, below the consensus estimate of 2.9%. Core PCE is the Fed’s preferred gauge of inflation and excludes volatile food and energy prices. Headline PCE increased by 2.8% from a year ago, matching the estimate. In addition, both year-ahead and long-run inflation expectations fell to 11-month lows in a survey conducted by the University of Michigan. Consumers now expect year-ahead inflation of 4.1%, down from 4.5%, and long-run inflation of 3.2%, down from 3.4%.
Meanwhile, consumer sentiment rose in early December, ending a streak of five consecutive months of declines. December’s preliminary Index of Consumer Sentiment tallied at 53.3, rising from 51.0 in November and ahead of the consensus estimate of 52.0. At the same time, the index is still down by 28% compared to a year ago. A reading of 80 or higher signals optimism, while a reading of 60 or below signals pessimism.
“Overall, while views of current conditions were little changed, expectations improved, led by a 13% rise in expected personal finances, with improvements visible across age, income, education, and political affiliation,” said Surveys of Consumers Director Joanne Hsu.
S&P Dow Jones Indices is set to announce new additions to the S&P 500 (SPX), if any, after the market close. The benchmark index undergoes rebalancing each quarter, with the new fourth-quarter changes effective as of December 19. Companies must meet a range of requirements in order to be considered for inclusion, such as a market capitalization of at least $22.7 billion and a minimum monthly trading volume of at least 250,000 shares during the past six months.
Stephens analyst Melissa Roberts believes that Comfort Systems (FIX), Pure Storage (PSTG), and Ciena (CIEN), the three largest companies in the S&P Midcap 400 index, are strong contenders. KBW analyst Shreyank Gandhi pointed to Vertiv Holdings (VRT), CRH (CRH), Alnylam Pharmaceuticals (ALNY), and Ares Management (ARES) as potential candidates given their large market caps. Gandhi also floated the possibility of Carvana (CVNA), SoFi Technologies (SOFI), and Strategy (MSTR) being added to the benchmark index.
The S&P 500 (SPX) closed with a 0.19% gain, while the Nasdaq 100 (NDX) returned 0.43%.
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