- US stocks soared Friday after tame inflation data and dovish comments from the Fed’s Austan Goolsbee.
- Goolsbee said he expects interest rates to continue to decline over the next 12-18 months.
- Investors are closely monitoring a potential government shutdown and a big triple-witching day for the options market.
US stocks surged on Friday, recovering some of the week’s losses sparked by a hawkish Federal Reserve.
The Dow Jones Industrial Average rose nearly 500 points, giving back some of its intraday gains after being up over 800 points. The Nasdaq Composite and the S&P 500 were up over 1%.
The market opened lower, though it reversed course later in the morning. The gains accelerated after Fed president Austan Goolsbee told CNBC that he expects interest rates to decline “a fair bit” over the next 12-18 months.
Goolsbee, along with the broader market, was encouraged by recent inflation data, which came in below economist estimates.
A slide in bond yields also helped stocks through the day, with the 10-year Treasury yield down four basis points to 4.528%.
The PCE index, which is the Fed’s preferred measure of inflation, rose 0.1% month-over-month in November, compared to economist estimates of 0.2%. On an annual basis, the gauge rose 2.4% versus expectations of 2.5%.
“We’re still on path to get to 2% and at least for this new month you don’t want to make too much out of any one month, but I’m hopeful that this suggests that the couple of months of firming were more of a bump than a change in path,” Goolsbee said of the recent inflation data.
Here’s where US indexes stood at the 4:oo p.m. closing bell on Friday:
Concerns of an imminent government shutdown have also driven recent market volatility. Congress has until midnight on Friday to pass a deal to avert a shutdown.
While Congress had a stopgap funding bill in place a few days ago, President-elect Donald Trump and Elon Musk torpedoed it, complaining about unnecessary spending measures within the bill.
A second attempt to pass a government funding bill endorsed by Trump failed in the House of Representatives late Thursday evening, with a final vote of 174 for and 235 against.
House Speaker Mike Johnson has since proposed a new plan that would temporarily keep the government open and fund disaster aid. The bill reportedly has support from Republicans, and is set for a vote later on Friday.
For his part, President Trump has said that he wants to see an elimination of the debt ceiling, or at least extend a pause of the debt ceiling to 2029 when his second term ends.
House Speaker Johnson’s new bill does not include the elimination of the debt ceiling.
Traders are also on watch at the close amid the quarterly “triple-witching,” with about $6.5 trillion worth of options tied to stocks and ETFs set to expire.
Here’s what else happened today:
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil increased 0.27% to $69.57 a barrel. Brent crude, the international benchmark, was higher by 0.19% to $73.02 a barrel.
- Gold was higher by 1.36% to $2,643.70 an ounce.
- The 10-year Treasury yield dropped 5 basis points to 4.530%.
- Bitcoin declined 0.98% to $96,426.
