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US stocks fell on Friday after the House of Representatives voted against a Trump-backed spending bill, further increasing the odds of a US government shutdown this weekend.
Investors also digested key inflation data that showed a deceleration in price increases during the month of November after the Federal Reserve lowered the number of cuts it expects next year.
The tech-heavy Nasdaq Composite (^IXIC) led the losses with a decline of 0.8%. The S&P 500 (^GSPC) fell around 0.4% while the Dow Jones Industrial Average (^DJI) also dropped around 0.1%.
A Fed-induced sell-off earlier in the week left the major averages reeling. And although stocks mostly stabilized on Thursday, the threat of a government shutdown, coupled with more Trump tariff threats on Europe, pressured global markets across the board.
“I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas,” Trump said in a post on Truth Social. “Otherwise, it is TARIFFS all the way!!!”
Global chip stocks sold off, with Europe’s ASML (ASML) dropping more than 1% early Friday while Taiwan’s TSMC (TSMC34.SA) fell close to 3%. US-based names such as Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO) also came under pressure.
Bitcoin (BTC-USD) prices retreated to drop below $95,000 per token amid record ETF outflows.
In individual names, Novo Nordisk (NVO) plunged about 20% — the most in over two decades — after its obesity drug trial disappointed investors. Tesla (TSLA) shares dropped 6% after recalling about 700,000 US vehicles over a tire pressure monitoring system defect.
Meanwhile, investors received another piece of the inflation puzzle with the release of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index.
The latest reading showed price increases fell month over month in November but still remained sticky as the central bank fights to bring inflation back down to its 2% target.
LIVE 6 updates
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Chip stocks dip as Trump threatens tariffs on Europe
Global chip stocks fell as president elect Donald Trump threatened tariffs on goods from Europe.
“I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas,” Trump said in a post on Truth Social.
“Otherwise, it is TARIFFS all the way!!!” he added.
Shares of the Dutch manufacturer of the world’s only mega-advanced chipmaking machines, ASML (ASML), fell as much as 2% early Friday. Taiwan-based chip manufacturer TSMC (TSM) saw its own shares dip 2.4%. The company, which makes chips for Apple (AAPL), Google (GOOG), Nvidia (NVDA), and other, has been expanding its footprint in the EU.
Meanwhile, shares of leading AI chipmaker Nvidia fell nearly 1%.
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Stocks slide as government shutdown looms, tech sells off
The major averages were on track for weekly losses on Friday as investors digested the release of a key inflation gauge while also assessing the odds of a US government shutdown after the House of Representatives voted against a Trump-backed spending bill.
The S&P 500 (^GSPC) fell around 0.5%, while the tech-heavy Nasdaq (^IXIC) dropped 0.9%. The Dow Jones Industrial Average (^DJI) also fell around 0.2%. All three major averages were headed for weekly losses.
Consumer Discretionary (XLY), Tech (XLK) and Financials (XLF) led to the downside.
The core Personal Consumption Expenditures (PCE) index released on Friday before the market open showed decelerating, yet still sticky price increases.
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Novo Nordisk stock plummets as next-gen obesity drug fails to impress
Novo Nordisk (NVO) stock tumbled more than 20% premarket on news that its next-generation obesity drug CagriSema underperformed expectations in a late-stage trial.
The Dutch pharmaceutical giant’s experimental obesity drug led to a 22.7% weight loss in the trial, falling short of the expected 25%.. Novo Nordisk’s stock plummet wiped out as much as $125 billion in market value.
Meanwhile, Novo Nordisk’s (NVO) GLP-1 drugs, Ozempic for diabetes and Wegovy for weight loss, are poised to be taken off the FDA’s shortage list after the company notified the FDA of the drugs’ availability in November. That would mean the company would face less competition from telehealth such as Hims & Hers (HIMS), which offer copycat versions of its drugs.
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Fed’s preferred inflation gauge: Price increases fall in November but still sticky
The latest reading of the Federal Reserve’s preferred inflation gauge showed price increases fell month over month in November but still remained sticky as the central bank fights to bring inflation back down to its 2% target.
The data, released early Friday by Bureau of Economic Analysis (BEA), comes after the central bank slashed interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also signaled less easing to come in 2025 with inflation expected to remain elevated over the longterm.
In November, the core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely tracked by the Fed, rose 0.1% from the prior month, a deceleration from October’s 0.3% monthly gain in prices. The monthly increase came in slightly lower compared to economist expectations of a 0.2% increase.
Over the prior year, core prices rose 2.8%, matching the increase seen in October and also lower than Wall Street’s expectations of a 2.9% rise. On a yearly basis, overall PCE increased 2.4%, a pickup from the 2.3% seen in October. Economists polled by Bloomberg had anticipated a yearly increase of 2.5%.
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Here comes another inflation report…
Investors this morning will closely be monitoring a key inflation report set to shape future monetary policy.
The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, which strips out volatile food and energy costs, is expected to have risen 0.2% month over month in November after prices rose 0.3% in October, according to Bloomberg data.
Over the prior year, Wall Street expects core prices to rise 2.9%, ahead of the 2.8% gain seen in October.
Overall PCE is expected to increase 2.5% year over year, an acceleration from October’s 2.3% annual increase.
The report, which will be released at 8:30 a.m. ET, comes after the central bank slashed interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also signaled less easing to come in 2025 with inflation expected to remain elevated over the longterm.
Earlier this month, the core Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, saw prices in November climb 3.3% over last year for the fourth consecutive month.
Meanwhile, the core Producer Price Index (PPI), which tracks the price changes companies see, revealed prices increased by 3.4% annually in November. That’s up from a 3.1% jump in October and also ahead of economist expectations of a 3.2% increase.
In a press conference following Wednesday’s interest rate decision, Federal Reserve Chair Jerome Powell indicated that the last mile of the Fed’s fight to curb inflation has been more challenging than central bank leaders initially projected.
“We’ve had a year-end projection for inflation, and it’s kind of fallen apart as we approach the end of the year,” Powell said. “I can tell you that might be the single biggest factor — inflation has once again underperformed relative to expectations.”
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Good morning. Here’s what’s happening today.
Economic data: PCE inflation (November), Personal income (November), Personal spending (November), University of Michigan consumer sentiment index (December, final), Kansas City Fed services activity (December)
Earnings: Carnival Corporation (CCL), Winnebago (WGO)
And here are some stories you may have missed early this morning or overnight…
House rejects Trump-backed plan on government shutdown, leaving next steps uncertain
Trump wants EU to buy more US oil and gas or face tariffs
Bitcoin pullback deepens as US ETFs suffer record daily outflow
Oil falls on demand growth concerns, robust dollar
Biden Cancels Nearly $4.3 Billion in Public Worker Student Debt
Novo Nordisk shares plunge after CagriSema obesity drug trial disappoints
FDA finalizes decision to end Lilly’s GLP-1 shortage, analysts predict Novo will be next
Tesla recalls nearly 700,000 vehicles in US over tire pressure monitoring system issue
Amazon workers strike at seven US facilities ahead of Christmas rush
Starbucks workers’ union plans strike in 3 US cities ahead of Christmas rush
Foxconn Interest in Nissan Said on Hold Amid Honda Merger Talks
Nike CEO Elliott Hill: Our turnaround will be challenging, and will hinge on sports
