Live Updates: US Stock Market Drops as Shutdown Nears and Inflation Data is Released

Global chip stocks took a hit on Friday after President-elect Donald Trump warned of imposing tariffs on European goods. In a post on Truth Social, Trump stated, "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. Otherwise, it is TARIFFS all the way!!!"

This rhetoric caused ripples across the semiconductor market. Shares of ASML, the Dutch firm known for producing the world's only advanced chipmaking machines, dropped by 2% during early trading hours. Taiwan Semiconductor Manufacturing Company (TSMC), a major supplier for tech giants like Apple, Google, and Nvidia, saw its stock fall by 2.4%. TSMC, which has been growing its presence in the EU, could face challenges if tariffs are implemented.

Nvidia, a leader in AI chip production, also felt the pressure, with its shares slipping nearly 1%. Analysts warn that escalating trade tensions between the U.S. and Europe could add uncertainty to the semiconductor industry, which is already navigating supply chain issues and fluctuating demand.

Stocks were on track for losses this week as fears of a U.S. government shutdown grew following the House of Representatives' rejection of a spending bill backed by former President Trump. The situation added to investor anxiety, further weighing on market sentiment.

The S&P 500 (^GSPC) fell about 0.5%, while the Nasdaq (^IXIC), which is heavily tech-focused, dropped 0.9%. The Dow Jones Industrial Average (^DJI) also saw a smaller dip of 0.2%. With these declines, all three major stock indexes were heading toward a weekly loss.

Tech stocks led the decline, with sectors like Consumer Discretionary (XLY) and Financials (XLF) also taking hits.

Investors were also reacting to the latest inflation report, the core Personal Consumption Expenditures (PCE) index, which showed that while inflation slowed slightly, it remained stubbornly high, adding to the market's concerns.

Novo Nordisk (NVO) saw its stock drop more than 20% in premarket trading after its next-generation obesity treatment, CagriSema, failed to meet expectations in a late-stage clinical trial. The experimental drug achieved a 22.7% weight loss, falling short of the anticipated 25% target, leading to a sharp decline in investor confidence. The stock's plunge wiped out up to $125 billion in market value for the pharmaceutical giant.

The latest data on the Federal Reserve’s key inflation metric, the core Personal Consumption Expenditures (PCE) index, indicates that while price increases slowed in November, inflation continues to linger above target as the Fed works to bring it back down to 2%.

The report, released Friday by the Bureau of Economic Analysis (BEA), follows the Fed's decision to cut interest rates by 25 basis points in its final meeting of the year. Officials also signaled that rate cuts will be less aggressive in 2025, as inflation is expected to stay higher for longer.

In November, the core PCE index— which excludes food and energy prices— increased by just 0.1% from the previous month. This marks a slowdown from the 0.3% rise in October and was slightly below economists' expectations, which had predicted a 0.2% increase.

On an annual basis, core prices grew by 2.8%, the same as the previous month, and just under the expected 2.9% increase. Overall, the PCE index saw a 2.4% increase year-over-year, a slight uptick from October’s 2.3% growth. This was slightly below the anticipated 2.5% annual rise.

While the data shows a slowing in price increases, inflation remains persistent, suggesting that the Fed's task of returning inflation to its 2% target will continue to face challenges in the months ahead.

Another crucial inflation report is set to be released today, and investors are paying close attention to it for insights into future monetary policy. The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy prices, is expected to rise 0.2% month-over-month in November, following a 0.3% increase in October.

On a year-over-year basis, the core PCE is anticipated to rise by 2.9%, slightly ahead of the 2.8% increase recorded in October. Overall, the PCE is projected to increase 2.5% year-over-year, an acceleration from the 2.3% rise in October.

The report, set for release at 8:30 a.m. ET, comes after the Federal Reserve's recent decision to lower interest rates by 25 basis points in its final policy meeting of the year. Officials have also signaled that future rate cuts will be more limited in 2025, with inflation expected to remain elevated over the long term.

Earlier data this month showed a 3.3% increase in the core Consumer Price Index (CPI) for November, marking the fourth consecutive month of rising prices. Additionally, the core Producer Price Index (PPI) saw a 3.4% annual rise in November, up from 3.1% in October.

In a recent statement, Federal Reserve Chair Jerome Powell acknowledged that controlling inflation has been more challenging than anticipated, noting that inflation has continued to underperform relative to initial projections.

As these reports are released, all eyes will be on how the latest inflation data impacts the Federal Reserve’s future policy decisions and the overall economic outlook.

Here’s what’s happening today that could move the markets:

Economic Reports: Today’s calendar is packed with important data, including the PCE inflation for November, along with figures on Personal Income and Spending for the same month. Additionally, we’ll see the final December reading for the University of Michigan Consumer Sentiment Index and the Kansas City Fed’s Services Activity report for December. Earnings Announcements: Watch for earnings from Carnival Corporation (CCL) and Winnebago (WGO), both of which could offer fresh insights into trends in the travel and leisure industries

Stay tuned for more live updates!.