Markets struggle to extend the 2 month rally

Dow crawled up 8, advancers over decliners 3-1 & NAZ added 37.  The MLP index rose 1+ to the 257s & the REIT index gained 2+ to 395.  Junk bond funds fluctuated & Treasuries were flattish (more below).  Oil inched up to the 74s & gold jumped 21 to 2072.

AMJ (Alerian MLP Index tracking fund)

An inflation measure closely watched by the Federal Reserve cooled again in Nov, providing some welcome relief to Ms of Americans who have been crushed by higher prices.  The personal consumption expenditures (PCE) index showed that consumer prices fell 0.1% from the previous month, according to the Labor Dept.  On an annual basis, prices climbed 2.6%, down from the revised 2.9% recorded the previous month.  The figures were both below estimates.  In another sign the Fed's fight against inflation is making progress, core prices, which strip out the more volatile measurements of food & energy, climbed 0.1% from the previous month & 3.2% from the previous year.  It marked the best reading for core inflation since 2021.  While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously said that core data is actually a better indicator of inflation.  Both the core & headline numbers point to inflation that is steadily returning to the Fed's preferred 2% target.  Other figures included in the report showed that consumer spending rose 0.3% in Nov, compared to a 0.1% increase in Oct, suggesting that Americans are still spending ahead of the pivotal holiday season.  Still, many economists anticipate that spending will slow in the coming months as consumers continue to grapple with expensive goods, high interest rates & the resumption of federal student loan payments.

Fed's favorite inflation gauge cooled more than expected in November

The 10-year Treasury yield is set to wrap up the week below 3.9% after new inflation data showed cooling price pressures.  The yield on the benchmark 10-year Treasury note traded flat at 3.88%.  The yield on the 30-year Treasury bond declined 1 basis point to 4.02%, while the 2-year yield inched up 1 basis point to 4.37%.  Yields move inversely to prices.  The core personal consumption expenditures price index, the Federal Reserve’s preferred core inflation metric, increased 0.1% for the month of Nov, & was up 3.2% from a year ago, the Commerce Dept reported.  The forecast expecting respective increases of 0.1% & 3.3% respectively.  10-year Treasury yields have declined by almost a percentage point since the end of Oct on rising expectations that the Fed will begin cutting rates as soon as Mar.

10-year Treasury yield closes out week below 3.9% after cool inflation data

Nike's (NKE), a Dow stock, sank & dragged the Dow & shares of other sportswear companies after weak consumer spending forced the Air Jordan 1 shoemaker to cut its annual revenue forecast & signal a profit-over-sales strategy shift.  The company also laid out a $2B cost-saving plan & said it was adopting a "more prudent approach" to planning for the rest of the year, blaming the forecast cut on weakness in its online business & increased promotions.  "This 'margins before sales' theme is not new across the entire U.S. retail and wholesale sectors. As companies clean up inventory in a tough macro backdrop, it has been the norm to guide for a weaker top-line offset by stronger margins and cost-cutting," Barclays analyst Adrienne Yih said.  "Nike needs increased and improved marketing investments while HOKA, On and Lululemon are scaling further with increased customer acquisition and retention," TD Cowen analysts said after downgrading the stock to "market perform" from "outperform."  NKE also unveiled plans to simplify its product assortment, increase automation & launch fresher styles to attract consumers.  The stock sank 12.43 (10%).

Nike forecast cut rattles sportswear stocks as spending stumbles

The 2 month rally for stocks is very tired.  Dow is up an astonishing 5000 in just 2 months.  Even the bulls need to take a pause for rest as the S&P 500 aims for 8 straight winning weeks.

Dow Jones Industrials