Shares continued to climb on Friday, boosted by hopes that Thursday’s inflation data, which showed slower-than-expected consumer price inflation last month, could cause the Fed to ease its rate hikes sooner rather than later.
The tech-heavy Nasdaq Compound jumped 1.9% to 11,323, while the wider S&P 500 Index increased by 0.9% to 3,992 Thursday’s impressive rally. And while the Dow Jones Industrial Average spent most of the day down due to weakness in healthcare stocks UnitedHealth (A H (opens in a new tab)-4.1%) and Merck (M.K.R. (opens in a new tab), -3.9%), a surge in purchasing power late in the day saw the blue-chip index post a modest gain (+0.1% to 33,747). It was the best week for the Nasdaq (+8.1%) since March, and for the S&P 500 (+5.9%) since June.
Despite the deceleration in inflation last month, today’s economic data shows that prices remain uncomfortably high for consumers. The University of Michigan Consumer Sentiment Index fell more than expected in November to 54.7 from 59.9 in October, wiping out about half of the index’s gains since hitting a low. historic low in June. Additionally, consumer expectations for where inflation will go this time next year rose to 5.1% from 5% last month.
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José Torres, senior economist at Interactive Brokers, says current consumer sentiment data points to a potentially difficult road ahead. “This month’s reading reflects broad weakness across all categories and implies consumers are feeling the pain of inflation, rising interest rates and tighter credit conditions,” Torres said. “Overall, this report points to a depleted consumer that is expected to weaken further next year.”
What Buffett’s big move could mean for USB
It’s been a busy week of headlines on Wall Street, but one notable piece of news has flown under the radar of all but the most ardent buffettologists. On Thursday, a regulatory filing revealed Berkshire Hathaway (BRK.B (opens in a new tab)), Warren Buffett’s holding company, reduced its stake in American bank (USB (opens in a new tab)).
Specifically, Berkshire sold 56% of its position in USB, raising its stake in the big bank to 3.5% from 8.1%. The move shouldn’t come as a major surprise given the title’s long-term performance issues. In addition, Buffett reduced his exposure to financial stocks by the Berkshire Hathaway stock portfolio for a while – including selling small portions of its stake in US Bancorp in recent quarters.
But what could this mean in the future? Read on while we take a closer look at Buffett’s big moveand the impact it could have on USB stock.