US stocks drop as investors mull mixed signals on spending and inflation data

• US stocks dropped after core inflation data and consumer spending sent different signals about the economy.
• Core inflation dropped below 3% year-on-year, while consumer spending rose 0.7%.

US stocks were mixed Friday as investors digested fresh economic data.

Core Personal Consumption Expenditure data, which is the Federal Reserve's preferred inflation gauge and which measures long-term price increases excluding food and energy, slowed to 2.9% in December from 3.2% the month before. That's the lowest pace of chance since Spring 2021.

Meanwhile, consumer spending data showed Americans are still spending at a strong pace. Capping off the year-end holiday season, personal spending rose 0.7% by $133.9 billion in December. The data points to strong demand from US consumers, and shows the economy is still running hot even as higher interest rates keep a tight grip on financial conditions.

Yields on the two-year US Treasury, which is the government bond more sensitive to the Fed's immediate moves, rose higher after the releases to 4.33%.

"We view today's PCE and Personal Spending data as bullish for both the Fed's path to their 2% target and also for the stock market," Larry Tentarelli, strategist from Blue Chip Daily Trend Report, said. "PCE continues to trend lower and with Core PCE at 2.9% [year-on-year] vs a Fed funds rate of 525-550, today's inflation report gives the Fed a path to cut interest rates."

Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Friday:

• S&P 500: 4,896.70, up 0.05%
• Dow Jones Industrial Average: 38,075.85, up 0.06% (+23.76 points)
• Nasdaq Composite: 15,496.26, down 0.09%

Here's what else is going on:

• Wall Street legend Burt Malkiel dismisses S&P 500 and recession forecasts, slams bitcoin, and warns pricey stocks may limit investors' returns.
• Jeffrey Gundlach is wary of stocks at current valuations, and expects a recession to hit.
• The US economy is likely headed for another 'roaring '20s' of rapid growth, market veteran Ed Yardeni says.
• These 7 recession indicators are still glaring bright red, signaling a sharp downturn could be imminent despite surging GDP and low unemployment.

In commodities, bonds, and crypto:

• Oil prices dipped, with West Texas Intermediate down 0.45% to $76.98 a barrel. Brent crude, the international benchmark, edged lower by 0.2% to $82.25 a barrel.
• Gold climbed 0.33% to $2,024.40 per ounce.
• The 10-year Treasury yield was up one basis point to 4.145%.
• Bitcoin went up 3.52% to $41,157.87.