US stocks managed to post gains on Thursday to keep hope of a new record high before the end of the year. The S&P 500 rose 0.1% and is now 60 points away from its all-time high. Futures are pointing higher again on Friday, with the S&P 500 currently expected to rise 0.25% later today. If that gain can be sustained, it could give stocks their second straight weekly gain.
Record highs are on the horizon as we head towards the end of the year
The question now is: Will the market push the major US blue chip index to new highs before the end of the week? The outcome could depend on lagged US PCE inflation data that will be released later today.
PCE inflation will remain stable, helping drive higher FOMO
Ultimately, while personal consumption expenditures data will help us get a more complete picture of the US inflation landscape, this data looks so lagging that as long as it is roughly in line with expectations at 2.8%, the rise may continue. If the PCE rate remains below 3%, this indicates that price growth in the United States is stable, even if it is higher than the Fed’s target rate of 2%. The last two weeks of the year are usually strong for stocks, and there may be a fear of missing out on some additional gains before the end of the year. Thus, FOMO can help push stocks into the end of the year and may help the market overcome its fears of extended valuations, especially in the technology sector.
Meta is getting real about the Metaverse
Corporate news could also drive stocks later today. Meta announced that it will cut spending at its Metaverse unit and instead focus on artificial intelligence. That helped the stock rise more than 3.5% on Thursday. Metaverse has been criticized and Meta’s share price has fallen 5% in the past six months and has underperformed the overall US index so far this year, it is only up 13% year to date and is the worst performing member of the Magnificent 7=. However, its fortunes have turned around in the past month, and it is now the second best performer after Google. Investors could continue to welcome news that it is shifting entirely toward artificial intelligence.
Netflix aims to take over Hollywood
Elsewhere, Netflix has also come into focus after it was confirmed that it is in exclusive talks to acquire Warner Bros Discovery. Netflix’s stock price has struggled in the past month, falling 0.7% on Thursday, bucking the overall market trend. The stock is down 3% this week and 6% in the past month. It is typical for a buyer of a trade to see some weakness in the stock market, although some investors may be concerned about a correlation of this size. First, it would create a giant in the TV and film space, which is causing monopoly fears, second, it would be a symbol of how technology is taking over Hollywood, and finally, Netflix has never attempted a deal of this size before, which could lead to some concern about how the new mega-company will be managed in the future. There are also political considerations, as a deal of this size would need approval from federal regulators. Therefore, Netflix’s stock price may still lag compared to the broader market as we approach the end of the year.
The British pound regains its magic
The pound sterling is heading for its second weekly gain, as the dollar continues to struggle. GBP/USD is currently testing the $1.3350 level, and a break above this level could open the way to $1.35. The British pound is the second best performer in the G10 FX space this week with the dollar falling.
