U.S. equities finished higher on last Friday following reports showing consumer inflation continued to ease last month, with consumers expecting price pressures to ease further in the months ahead. For the week, the Dow gained 0.9%, but the Nasdaq declined 1.9%, and the S&P 500 lost 0.2% as concerns about Fed rate hikes and the possibility of a recession weighed on investors.
U.S. consumers' attitudes toward the economy improved in December. The University of Michigan said last Friday that its consumer sentiment index rose to 59.7 this month from 56.8 in November, up slightly from the 59.1 preliminary mid-month reading. And new home sales edged higher in November from the month before, rising 5.8% from October.
After the Fed’s final policy decision of 2022 last week, strategists pointed out that the most surprising data point among economic projections from officials was an upward revision to their core PCE expectations to 3.5% from 3.1% previously at the end of 2023. This suggested to many analysts the Federal Reserve will need to keep rates at an elevated level through 2023.
On Tuesday, the latest data on home prices will become available, with the S&P CoreLogic Case-Shiller National Home Price Index and Freddie Mac’s House Price Index (HPI) for October. On Wednesday, the National Association of Realtors (NAR) will issue pending home sales figures for November. The Chicago Purchasing Managers’ Index (PMI) for December, due on Friday, will also provide an update on the strength of the U.S. manufacturing sector.
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