This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Finish line in sight?
The U.S. core personal consumption expenditures price index rose just 0.1% for November. Compared with a year ago, it was up 3.2%, 10 basis points less than expected. On a six-month basis, core PCE increased 1.9%, under the U.S. Federal Reserve's 2% goal — indicating that if current trends continue, the Fed has essentially reached its inflation goal.
Eight positive weeks
U.S. stocks were mixed Friday, but major indexes still notched their eighth consecutive winning week to kick off the "Santa Claus Rally." The pan-European Stoxx 600 index added 0.14%. London's FTSE 100 inched up 0.04% even as a revised reading of the U.K. economy showed it contracted by 0.1% in the third quarter, worse than previously estimated.
Game over
Tencent and NetEase, two gigantic China-based technology conglomerates, saw their shares sink after China announced surprise rules aimed at curbing excessive gaming and spending. Tencent shares tumbled 12.35% Friday afternoon and NetEase plunged an even more dramatic 24.6%. But smaller developers will be hurt more by the rules, analysts say.
El Niño's 'sweet tooth'
Even though inflation's subsiding in many advanced economies, soft commodities — such as orange juice, cocoa, coffee and sugar — are posting record rallies in 2023. That's because they're affected by extreme weather and supply concerns related to El Niño, a climate pattern that causes sea temperatures to rise, paving the way for storms and droughts that disrupt crops.
[PRO] Final trading week
After two winning months during which markets broke several records, stocks will try to sustain their momentum as they enter the final week of the year. It's typically a buoyant time for stocks, notes CNBC's Sarah Min, as the "Santa Claus Rally" cheers investors, even if trading volume and economic data are expected to be light.
The bottom line
Inflation looks like it's going down decisively, not just in terms of how much things cost, but in a way that's actually felt by the consumer.
The personal consumption expenditures price index measures how much consumers spend on goods and services. By contrast, the consumer price index tracks the price of goods and services — not actual consumer behavior.
So when the report says headline PCE — which includes food and energy costs — fell 0.1% on the month, that means prices of the things consumers actually spent money on fell in November. That's the first monthly decline since April 2020.
On an annual basis, the headline figure's just 2.6% higher.
"Adding in the further sharp slowdown in rent inflation still in the pipeline, it's hard to see any credible reason why the annual inflation rate won't also return to the 2% target over the coming months," wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Despite the upbeat PCE numbers, markets weren't that excited, probably because most of the positive inflation news had already been priced in after November's CPI report and the dovish Federal Reserve meeting.
The S&P 500 added 0.17% and the Nasdaq Composite climbed 0.19%.
In fact, the Dow Jones Industrial Average edged down 0.05%, as Nike weighed down the index. The sports company fell nearly 12% after lowering its full-year revenue expectations.
Still, all major U.S. indexes celebrated their eighth positive week in a row — the first since 2017 for the S&P and since 2019 for the Dow. For the week, the S&P was up 0.8%, the Dow 0.2% and the Nasdaq 1.2%.
More impressive, the Russell 2000, which tracks the smallest 2,000 stocks in the Russell 3000 Index, gained 2.46% week to date, its sixth consecutive winning week. Small-cap stocks are more sensitive to gyrations in the broader economy, and so when they rise, it's a sign investor — and corporate — confidence is returning.
"It underscores the breadth and depth of this holiday rally, which we think is going to bode well for investors moving into 2024," Greg Bassuk, chief executive officer at AXS Investments said.
And that's what everyone wants to see next year: stocks, not prices, showing strength.
— CNBC's Jeff Cox contributed to this report.
