U.S. Stocks Lack Direction Ahead Of Next Week's Fed Meeting

After moving sharply higher over the course of the previous session, stocks have shown a lack of direction over the course of the trading day on Friday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are turning in a mixed performance on the day. While the Dow is down 10.43 points or less than a tenth of a percent at 33,938.98, the S&P 500 is up 0.95 points or less than a tenth of a percent at 4,061.38 and the Nasdaq is up 38.77 points or 0.3 percent at 11,551.19.

The choppy trading on Wall Street comes as traders look ahead to the Federal Reserve’s highly anticipated monetary policy meeting next week.

With the Fed widely expected to slow the pace of interest rate hikes to 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for further rate hikes.

Recent upbeat economic data has generated some optimism the Fed could engineer a soft landing but has also led to concerns the central bank will need to keep rates at elevated levels for longer than anticipated.

On the U.S. economic front, the Commerce Department released a report showing personal income increased in line with economist estimates in the month of December.

The report said personal income inched up by 0.2 percent in December after rising by a downwardly revised 0.3 percent in November.

Economists had expected personal spending to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after slipping by 0.1 percent in November. The modest decrease matched economist estimates.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in December after inching up by 0.2 percent in November.

The inflation reading, which is said to be preferred by the Fed, was expected to show another 0.2 percent uptick.

The Commerce Department said the annual rate of growth in core consumer prices slowed to 4.4 percent in December from 4.7 percent in November.

“With higher interest rates evidently weighing heavily on demand now, we expect core inflation to continue moderating this year, which will eventually persuade the Fed to begin cutting interest rates late this year,” said Paul Ashworth, Chief North America Economist at Capital Economics.

A separate report from the National Association of Realtors showed an unexpected rebound in pending home sales in December, while the University of Michigan upwardly revised its reading on consumer sentiment in January.

The modest gain by the tech-heavy Nasdaq comes despite a sharp decline by shares of Intel (INTC), with the semiconductor giant plunging by 7.9 percent.

The steep drop by Intel comes after the company reported weaker than expected fourth quarter results and forecast a loss for the current quarter.

Energy giant Chevron (CVX) are also giving back ground after yesterday’s surge after reporting fourth quarter earnings that missed analyst estimates.

Meanwhile, shares of American Express (AXP) have soared by 10.3 percent after the credit card giant reported weaker than expected fourth quarter results but provided upbeat guidance for 2023 and increased its dividend.

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Gold stocks are seeing considerable weakness, however, with the NYSE Arca Gold Bugs Index falling by 1.6 percent. The index is pulling back further off Wednesday’s seven-month closing high.

The weakness among gold stocks comes as the price of gold for February delivery is slipping $4.70 to $1,925.30 an ounce.

A downturn by the price of crude oil is also weighing on oil stocks, dragging the NYSE Arca Oil Index down by 1.3 percent.

Steel and semiconductor stocks are also seeing notable weakness, while some strength is visible among retail and transportation stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index inched up by 0.1 percent, while Hong Kong’s Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets are seeing modest weakness on the day. While the German DAX Index is down by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.2 percent.

In the bond market, treasuries have moved to the downside as traders look ahead to next week’s Fed meeting. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.9 basis points at 3.522 percent.

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