Wall Street’s main indexes were set for a subdued open on Friday as an in-line inflation print signaling continued moderation in price pressures helped offset an earnings gloom after a dour revenue forecast from Intel steered declines in chip stocks.
The U.S. Commerce Department’s report showed the personal consumption expenditure index rose by 0.2% month-on-month and by 2.6% annually in December, both in line with expectations.
The core figure, excluding volatile items like food and energy - the Federal Reserve’s preferred inflation gauge – rose by 0.2% on a monthly basis, while the annual 2.9% rise came in slightly below expectations of a 3% increase.
“I don’t see much that would point towards a lower interest rate, but also nothing that’s pointing to a higher rate, and that’s good enough for now,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
Intel slumped 9.8% in premarket trading after forecasting that its first-quarter revenue could miss estimates by over $2 billion, driving losses between 0.9% and 1.5% in other chip stocks including Advanced Micro Devices, Qualcomm and Micron Technology.
This, along with Tesla’s growth warning on Wednesday, likely deepened worries over rich valuations of heavily weighted megacap companies. Five of the “Magnificent Seven” - Apple, Microsoft, Amazon.com, Alphabet and Meta Platforms – are due to report their results next week.
Wall St climbs after strong GDP data
Chipmaking tools maker KLA Corp also shed 3.4% following its third-quarter revenue forecast below estimates.
A recent run in chip and technology stocks helped resurrect a Wall Street rally, which had lost steam at the year’s start after bumper gains in 2023, as investors grappled with growing uncertainty over when interest-rate cuts could arrive this year.
The S&P 500 closed at an all-time high for a fifth straight session on Thursday after data reflecting strong fourth-quarter U.S. economic growth shrugged off dire predictions of a recession in the aftermath of the Fed’s rapid rate hikes.
All the three major indexes are set for their third straight week of gains, marking their 12th weekly advance out of 13.
At 8:49 a.m. ET, Dow e-minis were down 4 points, or 0.01%, S&P 500 e-minis were up 4 points, or 0.08%, and Nasdaq 100 e-minis were down 29.5 points, or 0.17%.
Dow component American Express added 1.6% as the credit card firm forecast a higher-than-expected annual profit, while peer Visa declined 2.6% after the world’s largest payments processor’s tepid current-quarter revenue growth forecast eclipsed an earnings beat.
T-Mobile dropped 1.9% as the wireless carrier missed fourth-quarter profit expectations, while Sweden-based Autoliv gained 2.3% after reporting fourth-quarter operating profit above expectations.
Of the S&P 500 companies that have reported earnings so far, 82% have surpassed expectations, LSEG data showed on Thursday, compared with a long-term average beat rate of 67%.
Tesla rebounded 1.7% in early trade after the electric-vehicle-maker’s market value dropped below Eli Lilly and was just above Broadcom on Thursday.
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