Major Indices are mostly holding marginal gains but near sessions’ lows, except for the Russell 2000 moving into the red.

Seven sectors are moving higher, with Communication Services (XLC) in the lead and getting a boost from its Magnificent Seven components of Alphabet (GOOG/L) and Meta Platforms (META) as well as strength in telecom services, after Verizon’s (VZ) $20B acquisition of Frontier was approved. The sector is also home to today’s hottest news, as Netflix (NFLX) entered into an agreement to acquire Warner Bros. Discovery (WBD) in a cash and stock transaction worth $72 million.

Meanwhile, Utilities (XLU) are lagging, led lower by nuclear stocks. Industrials (XLI) are the second worst performing sector, led lower by defense stocks.

The Ten-Year Treasury Yield (TNX) is bouncing off its 50-day moving average and up 2.3 basis points today.

Economic Data

Both the headline and core PCE for September met estimates, with core PCE cooling, further reinforcing the concern shift to the labor market.

Headline:

• 2.9% vs. consensus 2.9% year over year
• 0.3% vs. consensus 0.3% month to month

Core:

• 2.8% vs. consensus 2.9% year over year
• 0.2% vs. consensus 0.2% month to month

While most goods saw spending fall, these were offset largely by an increase in gasoline and energy goods, causing overall goods spending to increase by $2.1B. Service spending nearly rose across the board, with the only exception being a marginal dip in recreational services.

December’s preliminary Michigan Consumer Sentiment rose to 53.3 from 51, surpassing expectations of 52. While current conditions edged lower, to 50.7 from 51.1, this was offset by a rise in expectations to 55 from 51. In addition, year ahead inflation expectations eased to 4.1% from 4.5%, and 5-year inflation expectations also eased to 3.2% from 3.4%. The latter reinforced the shift of the focus of the Fed’s dual mandate to labor.

The market appears to mark time as investors wait for clarity from next week’s FOMC decision.

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