Stocks waver after lighter reading on Fed’s key inflation gauge

US stocks faltered at the open on Thursday as December trading began, despite signs of easing inflation and signs of a slower pace and magnitude of rate hikes later this month.

The S&P 500 rose 0.2%, while the Dow Jones Industrial Average fell 0.3%. The tech-heavy Nasdaq Composite gained 0.4%. Elsewhere in the market, the U.S. dollar index retreated to a three-month low and U.S. Treasury yields were steady after sharp declines.

The core price index for personal consumption expenditures (PCE), a measure of inflation watched closely by the Federal Reserve, rose 0.2% in October, less than expected.

Meanwhile, claims for unemployment insurance fell last week, remaining near record lows. Initial jobless claims, the most timely snapshot of the labor market, rose to 225,000 for the week ended Nov. 26, down 16,000 from the previous week’s revised level, Labor Department figures showed on Thursday.

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Thursday’s moves follow flurries from the previous session’s major averages after a speech by Powell in Washington, DC, in which he noted that US central bank officials have points On Wednesday, the S&P 500 rose 3.1%, the Dow rose 2%, or more than 700 points, and broke out of a bear market, and the Nasdaq rose 4.4%.

“It makes sense to moderate the pace of our rate hikes as we approach the level of moderation that will be sufficient to lower inflation,” Powell said, speaking at the Brookings Institution, as he acknowledged the “uncertain lags” in monetary tightening. “The time to moderate the pace of rate hikes may come as soon as the December meeting.”

Powell’s comments are likely to be the last public remarks he will make before Federal Reserve officials enter a blackout period (a time when policymakers limit speaking in public before a policy-setting meeting) ahead of their next meeting from December 13 to 14.

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“The focus now should not be on pace, but on how much higher rates will have to go and how long they will have to stay there,” Jason England, global bond portfolio manager at Janus Henderson Investors, said in a note. “As the Fed will need to see “substantially more evidence” that inflation is slowing before they stop, and Powell ended his speech by saying that “history strongly warns against premature policy easing,” pricing in the cuts is premature.”

WASHINGTON, DC - NOVEMBER 30: US Federal Reserve Chairman Jerome Powell speaks at the Brookings Institution on November 30, 2022 in Washington, DC.  Powell discussed the economic outlook, inflation and the labor market.  (Photo by Drew Angerer/Getty Images)

WASHINGTON, DC – NOVEMBER 30: US Federal Reserve Chairman Jerome Powell speaks at the Brookings Institution on November 30, 2022 in Washington, DC. Powell discussed the economic outlook, inflation and the labor market. (Photo by Drew Angerer/Getty Images)

Sentiment received a boost on Thursday as worries about zero outbreaks of COVID-19 in China eased after First Vice President Sun Chunlan urged an “optimization” of the nation’s virus response as the pathogenicity is weakened.

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Meanwhile, on the corporate side, all eyes were on Salesforce ( CRM ) following news that co-CEO Bret Taylor would step down in January and co-founder Marc Benioff would become sole CEO. Shares fell 10% in early trading.

Shares of Snowflake ( SNOW ) rose 3%, even as the company’s fourth-quarter product revenue forecast missed the expected slowdown in technology spending.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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