The US government has narrowly avoided a shutdown after President Joe Biden signed a stopgap funding bill on Saturday. The bill suspended the US debt limit for two years, following harsh criticism from President-elect Donald Trump and Elon Musk.
In economic news, headline inflation in November rose 0.1% from October, with prices increasing 2.4% annually. However, core inflation came in lower than forecast, at 10 basis points below expectations.
Markets responded positively on Friday, with the S&P 500 rising 1.09%, followed by a decline over the week. The Asia-Pacific region saw gains, particularly Japan’s Nikkei 225, which advanced around 1.2% due to merger talks between Honda, Nissan, and Mitsubishi.
Several blue-chip companies announced CEO changes this year, with 327 departures in US public companies through November. Portfolio managers are taking notice of Broadcom as a potential outperformer, following Nvidia’s dominance in the artificial intelligence chip space.
The Federal Reserve indicated two quarter-point rate cuts in the year ahead, fewer than previously projected. However, recent data suggests that inflation may be cooling down, with the personal consumption expenditures price index coming in lower than expected. Fed Chair Jerome Powell emphasized the importance of “data-dependent” decisions.
Chicago Fed President Austan Goolsbee expressed hope that November’s inflation reading indicates a return to its downward trajectory. However, Powell noted that one month’s data would not have shifted the dots around, suggesting that trying to time or game the market might not be the best idea.
Instead, investors should focus on fundamentals such as earnings, cash flow, and future income, which drive stock prices even in volatile times.
Source: https://www.cnbc.com/2024/12/23/cnbc-daily-open-inflation-and-dot-plots.html