Stocks & Bonds Fell for the Week Post Fed Pivot – US Market Wrap

Major US stock indexes are on track for their worst week since mid-November, as the Federal Reserve’s decision to be more cautious about decreasing interest rates next year roiled markets. Treasuries fell for the second straight week.

The S&P 500 and Nasdaq 100 gained on Friday, reversing a sharper weekly selloff, after new data eased concerns about inflation. While Treasury yields were lower throughout the curve on Friday, the 10-year rate has risen by at least 12 basis points this week.

The Fed rattled markets earlier this week when it reduced the amount of cuts it expects in 2025. A never-ending stream of statistics demonstrating how strong the economy is only reinforces the central bank’s position. With Fed Chair Jerome Powell’s focus on inflation development, the dampened personal consumption expenditures data for November reported on Friday would likely comfort policymakers and investors that the economy is cooling despite its robustness.

Meanwhile, US consumer sentiment improved for the fifth consecutive month in December. The sentiment index continues to show an increasing outlook among Republicans following the November election, while Democrats become more pessimistic.