US stocks pare losses after PCE data; government shutdown still weighs

US stocks slipped lower Friday, weighed by the prospect of a government shutdown, but pared some losses after the release of cooler-than-expected inflation data.  

At 09:35 ET (14:35 GMT), the Dow Jones Industrial Average fell 145 points, or 0.4%, the S&P 500 index dropped 35 points, or 0.6%, and the NASDAQ Composite slipped 175 points, or 0.8%. US government shutdown looms

The threat of a US government slowdown was raised Thursday after a Republican bill that included Donald Trump’s demands for higher government spending and a raised debt ceiling was rejected in a vote in the House of Representatives, with several Republican senators also openly defying the President-elect. 

The new bill replaced a bipartisan deal to approve government spending, after Trump and tech billionaire Elon Musk came out in opposition of the old deal. 

Government funding is set to expire at midnight on Friday, marking the beginning of a partial government shutdown that could disrupt operations ranging from border security to travel. The disruption is expected to be particularly dire amid increased travel trends during the holiday season. 

A government shutdown presents another layer of uncertainty for Wall Street, which was already nursing steep losses from earlier this week after the Federal Reserve cut interest rates but flagged a substantially slower pace of rate cuts in 2025.  PCE cooler than expected

The widely-watched PCE price index release, the Fed’s preferred inflation gauge, rose 2.4% in November on an annual basis, compared with estimates of 2.5%. On a monthly basis, it rose just 0.1%.

Excluding volatile food and energy components, the core PCE rose 2.8%, compared with estimates of 2.9%.

This release calmed some concerns as upside risks to inflation were back on the Fed's radar, with US consumer prices increasing by the most in seven months in November, and the potential for the new Donald Trump administration to authorise trade and tax policies that many see as inflationary. FedEx to spin off freight business

In corporate news, FedEx (NYSE:FDX ) stock soared 5% after the delivery giant reported better-than-expected earnings in the fiscal second quarter, while also announcing that it’s planning on spinning off its freight business.

Nike (NYSE:NKE ) stock fell 1.5% after the sportswear retailer flagged "severe issues" in its guidance, despite second-quarter results topping expectations. Crude heading for weekly loss

Crude prices fell Friday, on track for hefty weekly losses, as a stronger dollar and persistent concerns over slowing demand weighed. 

By 09:35 ET, the US crude futures (WTI) dropped 2.5% to $68.85 a barrel, while the Brent contract fell 0.7% to $72.36 a barrel.

The benchmarks are on course for weekly losses of around 3% after the dollar soared to a two-year high in the wake of the Federal Reserve turning hawkish about cutting interest rates in 2025.

On the demand front, limited details on more stimulus measures in China and signs of cooling US fuel demand also weighed. 

(Ambar Warrick contributed to this article.)

Source: Investing.com