Dow, S&P 500, Nasdaq slide as government shutdown looms, inflation data improves but still sticky

The major averages were on track for weekly losses on Friday as investors digested the release of a key inflation gauge while also assessing the odds of a US government shutdown after the House of Representatives voted against a Trump-backed spending bill.

The S&P 500 (^GSPC) fell around 0.5%, while the tech-heavy Nasdaq (^IXIC) dropped 0.9%. The Dow Jones Industrial Average (^DJI) also fell around 0.2%. All three major averages were headed for weekly losses.

Consumer Discretionary (XLY), Tech (XLK) and Financials (XLF) led to the downside.

See more : Stock futures inch higher as the market heads into holiday-shortened week: Live updates

The core Personal Consumption Expenditures (PCE) index released on Friday before the market open showed decelerating, yet still sticky price increases.

Novo Nordisk (NVO) stock tumbled more than 20% premarket on news that its next-generation obesity drug CagriSema underperformed expectations in a late-stage trial.

The Dutch pharmaceutical giant’s experimental obesity drug led to a 22.7% weight loss in the trial, falling short of the expected 25%.. Novo Nordisk’s stock plummet wiped out as much as $125 billion in market value.

Meanwhile, Novo Nordisk’s (NVO) GLP-1 drugs, Ozempic for diabetes and Wegovy for weight loss, are poised to be taken off the FDA’s shortage list after the company notified the FDA of the drugs’ availability in November. That would mean the company would face less competition from telehealth such as Hims & Hers (HIMS), which offer copycat versions of its drugs.

Read that story here.

The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases fell month over month in November but still remained sticky as the central bank fights to bring inflation back down to its 2% target.

The data, released early Friday by Bureau of Economic Analysis (BEA), comes after the central bank slashed interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also signaled less easing to come in 2025 with inflation expected to remain elevated over the longterm.

In November, the core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely tracked by the Fed, rose 0.1% from the prior month, a deceleration from October’s 0.3% monthly gain in prices. The monthly increase came in slightly lower compared to economist expectations of a 0.2% increase.

Over the prior year, core prices rose 2.8%, matching the increase seen in October and also lower than Wall Street’s expectations of a 2.9% rise. On a yearly basis, overall PCE increased 2.4%, a pickup from the 2.3% seen in October. Economists polled by Bloomberg had anticipated a yearly increase of 2.5%.

Investors this morning will closely be monitoring a key inflation report set to shape future monetary policy.

The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, which strips out volatile food and energy costs, is expected to have risen 0.2% month over month in November after prices rose 0.3% in October, according to Bloomberg data.

Over the prior year, Wall Street expects core prices to rise 2.9%, ahead of the 2.8% gain seen in October.

Overall PCE is expected to increase 2.5% year over year, an acceleration from October’s 2.3% annual increase.

The report, which will be released at 8:30 a.m. ET, comes after the central bank slashed interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also signaled less easing to come in 2025 with inflation expected to remain elevated over the longterm.

Earlier this month, the core Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, saw prices in November climb 3.3% over last year for the fourth consecutive month.

Meanwhile, the core Producer Price Index (PPI), which tracks the price changes companies see, revealed prices increased by 3.4% annually in November. That’s up from a 3.1% jump in October and also ahead of economist expectations of a 3.2% increase.

In a press conference following Wednesday’s interest rate decision, Federal Reserve Chair Jerome Powell indicated that the last mile of the Fed’s fight to curb inflation has been more challenging than central bank leaders initially projected.

See more : Clough Global Dividend and Income Fund : Annual Statement of Changes in Beneficial Ownership (Form 5)

“We’ve had a year-end projection for inflation, and it’s kind of fallen apart as we approach the end of the year,” Powell said. “I can tell you that might be the single biggest factor — inflation has once again underperformed relative to expectations.”

Economic data: PCE inflation (November), Personal income (November), Personal spending (November), University of Michigan consumer sentiment index (December, final), Kansas City Fed services activity (December)

Earnings: Carnival Corporation (CCL), Winnebago (WGO)

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