Stocks Turn Lower and Alternative Inflation Measure Cooled

Barry Adams
01 Dec, 2022
New York City

Stocks pared some of the gains of the previous session and investors digested latest economic data on personal income, spending and inflation. 

Investors also reacted to corporate news after Salesforce Inc unexpectedly announced the resignation of its co-CEO. 

Latest earnings from Five Below, Victoria's Secret and Snowflake also impacted stocks. 

 

Personal Spending and Income Rose 

Personal spending in October rose 0.8% following 0.6% in September and personal income increased 0.7%, the most in a year, the U.S. BEA reported Thursday.

 

PCE Price Index Growth Slows 

The price consumption expenditure, the Federal Reserve's preferred measure of inflation which takes into account customers substituting higher-priced goods for cheaper alternatives, rose at the same rate in October but slowed to the lowest level from a year ago.  

The PCE price index increased 0.3% in October from September and rose 6.0% from a year ago, the lowest in the year so far. 

The monthly increase in the index in October matched the rates for the previous two months. 

Prices for goods increased 7.2% and services rose 5.4% from a year ago. 

The core PCE Index, which excludes food and energy, slowed to 5.0% from 5.2% in the previous month. 

 

Weekly Jobless Claims Decline 

Initial jobless claims for the week ending November 26 declined to 226,000 from the upwardly revised 241,000 in the previous week, the Department of Labor reported Thursday. 

The previous week's level was revised up by 1,000 from 240,000 to  241,000.

The 4-week moving average increased by 1,750 to 228,750 from the previous week's revised average by 250 from 226,750 to 227,000. 

 

Markets Overview 

The S&P 500 index declined 0.3% to 4,066.80 and the Nasdaq Composite traded lower 0.2% to 11,440.70. 

Crude oil increased $2.40 to $82.94 a barrel and natural gas increased 2 cents to $6.95 a thermal unit. 

The yield on 2-year Treasury notes declined to 4.32%, 10-year Treasury notes eased to 3.62% and 30-year Treasury bonds traded at 3.74%. 

 

U.S. Stock Movers 

Salesforce Inc declined 9.5% to $145.11 after the company said co-CEO Bret Taylor has decided to step down from the company without giving any reasons. 

This is the second time in four years that the co-CEO has resigned from the company. 

The software developer said fiscal third quarter revenue increased 14% to $7.8 billion and earnings declined to $210 million from $468 million or 21 cents from 48 cents a year ago.

Victoria's Secret & Company fell 6.7% to $42.91 after the company reported weaker-than-anticipated quarterly results. 

Revenue in the fiscal third quarter fell 8.5% to $1.32 billion and earnings plunged to $24.4 million from $75.2 million or 29 cents from 81 cents a year ago.

Five Below soared 16.6% to $187.48 after the deep discount retailer reported stronger-than-anticipated quarterly results. 

Revenue in the fiscal third quarter increased 6.2% to $645 million but net income plunged to $16.2 million from $24.2 million or 29 cents from 43 cents a year ago.

Costco Wholesale Corporation declined 6.2% to $505.83 after the company reported weak November sales and e-commerce sales fell. 

Costco Wholesale said November sales increased 5.7% to $19.1 billion but e-commerce sales dropped 10.1% from a year ago.