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NEW YORK (AP) — Wall Street capped its eighth straight winning week with a quiet finish Friday, following reports showing inflation on the way down and the economy potentially on the way up.
The S&P 500 rose 0.2% to sit less than 1% below its record set nearly two years ago. The Dow Jones Industrial Average slipped 18 points, or less than 0.1%, and the Nasdaq composite edged 0.2% higher.
Bristol Myers Squibb helped lift the market and rose 2% after it said it will buy Karuna Therapeutics in a cash deal valued at a total of $14 billion. That helped offset an 11.8% slump for Nike, which cut its revenue forecast for its fiscal year and dragged sharply on the Dow. The athletic giant cited weakness in China, the downsides of a stronger U.S. dollar for exporters and other challenges.
But Wall Street’s focus was squarely on a suite of economic reports released Friday, which led to some swings in Treasury yields.
Falling yields have been a primary reason the stock market has charged roughly 15% higher since late October. Not only do they boost the economy by encouraging borrowing, they also relax the pressure on the financial system and goose prices for investments. They’ve been easing on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates through 2024.
A report on Friday showed the measure of inflation the Federal Reserve prefers to use slowed by more than economists expected, down to 2.6% in November from 2.9% a month earlier. It echoed other inflation reports for November released earlier in the month.
“Inflation has fallen very quickly this year, especially in the last three to five months,” said Niladri “Neel” Mukherjee, chief investment officer of TIAA’s Wealth Management team. Over the next few months, “I think inflation will fade away in terms of top-of-mind items” as risks for financial markets.
Friday’s data also showed spending by U.S. consumers unexpectedly rose during the month. While that’s a good sign for growth for an economy driven mainly by consumer spending, it could also indicate underlying pressure remains on inflation.
“People are tightening their belts, but they’re not suffocating their spending,” said Brian Jacobsen, chief economist at Annex Wealth Management.
The Federal Reserve is walking a tightrope, trying to slow the economy enough through high interest rates to cool inflation, but not so much that it tips into a recession. A stronger-than-expected economy could complicate the balancing act.
Other reports on Friday showed orders for long-lasting manufactured goods strengthened more in November than expected, sales of new homes unexpectedly weakened and sentiment for U.S. consumers improved.