Review & Preview: Inflation Redux

Dec 04, 2025 19:55:00 -0500 by Sabrina Escobar | #Markets #Review & Preview

So We Wait. The three major indexes hovered around the break-even point for most of Thursday’s trading session as investors positioned themselves for a long-awaited inflation report.

The Dow Jones Industrial Average fell 32 points, or 0.1%. The S&P 500 rose 0.1%, while the Nasdaq Composite gained 0.2%.

Everyone, it seems, is waiting for tomorrow’s personal consumption expenditures report, which will mark the first official reading of the Federal Reserve’s preferred inflation index since late September.

The last reading we got showed that August inflation rose 2.7% year over year. Economists polled by FactSet expect September prices ticked up 2.8%.

For the past few months, investors and policymakers have had to rely on guesswork to determine the path of inflation. Friday’s report will help clear the air—and theoretically make Fed officials’ coming interest-rate decision easier. My colleague Jacob Sonenshine writes that an in-line inflation reading (or lower) would likely increase the odds of a cut to the federal-funds rate, which could give stocks a boost. On the flip side, a hotter-than-expected reading may decrease the chance of a cut.

A prospective cut to interest rates helped fuel the Russell 2000’s rally on Thursday. The small-cap index gained about 0.7%, marking its seventh record close this year. Lower rates make borrowing cheaper for smaller companies, which are more reliant on debt than larger players, reports Barron’s Karishma Vanjani.

Of course, there’s a lot more that goes into the rate-cut decision than just the PCE data. The central bank’s dual mandate requires that policymakers promote both stable prices and maximum employment. There’s dispute over how the Fed should address that second mandate, particularly because the data doesn’t paint a clear picture.

Yesterday’s private payroll report, issued by ADP, showed that the U.S. economy unexpectedly shed 32,000 jobs in November. But today’s initial jobless claims data showed new applications for unemployment benefits fell last week—a sign that the labor market remains healthy.

The debate will likely continue right into the Fed’s interest-rate announcement next Wednesday at 2 p.m.

Company

Last

Chg

Chg%

Dow Jones Industrial Average

47,960.88

109.94

0.23%

S&P 500 Index

6,870.64

13.52

0.20%

NASDAQ Composite Index

23,565.97

60.84

0.26%

Market Data as of

The Hot Stock: Dollar General +14%
The Biggest Loser: Intel -7.5%

Best Sector: Energy +1.9%
Worst Sector: Utilities -0.3%

Created with Highcharts 9.0.1Thursday, Dec. 4Index performanceSource: FactSetAs of Dec. 5, 4 p.m. ET

Created with Highcharts 9.0.1Dec. 500.10.20.30.40.50.60.70.8%Nasdaq CompositeDow industrialsS&P 500

So You Want to Be a Billionaire?

Better start investing like one. And these days, it seems like the world’s uber-rich aren’t as eager to invest in the U.S. as they used to be.

UBS’s 11th annual Billionaire Ambitions Report found that only 63% of surveyed billionaires said North America offered the greatest opportunity for returns over the next year, down from 80% in last year’s survey. Policy uncertainty, high stock valuations, inflation, and “the way in which the U.S. is engaging the world” have caused North American investments to lose their luster, Dan Scansaroli, UBS’s co-head of investment management for the Americas, said in an interview with my colleague Abby Schultz.

Instead, interest is shifting abroad, particularly to emerging markets and Western Europe, Scansaroli said. International stocks appeal more to U.S.-dollar investors because of falling rates and a movement away from the dollar among central banks around the world, he said.

The continuing macroeconomic risks are also pushing billionaires toward real assets, such as infrastructure, real estate, and gold, the survey showed. A little over two-thirds of respondents planned to stay invested in the precious metal and about a third planned to increase their holdings.

UBS’s survey also showed that the billionaire population is thriving. The number of global billionaires rose nearly 9% in the 12 months through April 4, to 2,919. Their combined wealth grew 13% to nearly $15.8 trillion from just under $14 trillion a year earlier.

Two thirds of the newest billionaires were self-made entrepreneurs, while the remaining third inherited their wealth. More than half of those inheritors are from Western Europe, unsurprising given the region’s longer history of wealth accumulation, Abby writes.

Read her full story here.

The Calendar

Victoria’s Secret reports quarterly results tomorrow.

The Bureau of Economic Analysis will release the personal consumption expenditures price index for September. The consensus estimate is for a 2.8% year-over-year increase, compared with a 2.7% annual increase in August. The core PCE price index, which excludes food and energy prices, is expected to rise 2.8%, slightly lower than August’s 2.9% increase.

The University of Michigan releases its Consumer Sentiment Index for December. The consensus call is a 52 reading, up from 51 in November.

What We’re Reading Today

What’s Ahead for Markets in 2026? Join Barron’s virtual roundtable on Dec. 11.

From “Liberation Day” tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us for discussions with investment strategists and money managers about the outlook for the economy and markets in 2026—and how to position your portfolio for success.