Investors had to weigh data showing a welcome dip in US inflation with a worrying dip in consumer spending / © GETTY IMAGES NORTH AMERICA/AFP/File
Wall Street stocks finished off a positive week on an upbeat note Friday after data showed further ebbing of US inflation, while European equities wobbled before ending the session with meager gains.
A benchmark of US inflation closely-watched by the Federal Reserve showed further moderation in December, according to official data.
The personal consumption expenditures price index rose 5.0 percent last month from a year ago, a smaller increase than in November but still above the Fed's target rate.
Fed policymakers have hinted that the central bank could enact a quarter-point interest rate hike next week, smaller than a series of recent increases and enough of a shift to raise investor hopes of a policy pivot.
"There's certainly a potential for a softish landing, or at least it hasn't been ruled out," said Art Hogan, an analyst at B. Riley Financial.
The broad-based S&P 500 finished at 4,070.56, up 0.3 percent for the day and 2.5 percent for the week.
- 'Goldilocks scenario' -
Central banks spent last year ramping up borrowing costs to battle soaring prices and any sign of strength in the economy was taken as a bad sign that officials would continue to tighten policy sharply, threatening companies' profits.
The European Central Bank is also holding a monetary policy meeting next week, with analysts expecting a 50-basis-point rate increase.
Concern towards the end of the year focused on a possible global recession caused by the restrictive policies, with several observers warning that top economies were likely to suffer a so-called hard landing.
Thursday's US growth figures showed a slowdown in 2022 from the previous year but a better-than-expected performance in the final months. That was described as a "Goldilocks scenario" where the figures are neither too good nor too bad.
Yet, there remain lingering jitters of a possible downturn.
"There being a time lag between interest rate hikes and the effect on the economy, it remains difficult to predict how much of the Federal Reserve's actions so far are having the desired dampening effect," noted Interactive Investor analyst Richard Hunter.
"More pessimistic investors are suggesting that the latest quarter of growth could be the last before previous hikes take full effect, potentially pushing the economy towards recession this spring," he said.
Investors are also keeping a nervous eye on earnings season, which has been mixed thus far.
On Friday, American Express jumped 10.5 percent after its forecast topped analyst expectations as it pointed to the highest-ever quarterly card member spending.
But Intel dropped 6.4 percent after it reported lower profits and projected a loss in the first quarter of 2023 as it contends with weakening demand and oversupply of chips in key markets.
- Key figures around 2210 GMT -
New York - Dow: UP 0.1 percent at 33,978.08 (close)
New York - S&P 500: UP 0.3 percent at 4,070.56 (close)
New York - Nasdaq: UP 1.0 percent at 11,621.71 (close)
London - FTSE 100: UP less than 0.1 percent at 7,765.15 (close)
Frankfurt - DAX: UP 0.1 percent at 15,150.03 (close)
Paris - CAC 40: UP less than 0.1 percent at 7,0097.21 (close)
EURO STOXX 50: UP 0.1 percent at 4,178.01 (close)
Tokyo - Nikkei 225: UP 0.1 percent at 27,382.56 (close)
Hong Kong - Hang Seng Index: UP 0.5 percent at 22,688.90 (close)
Shanghai - Composite: Closed for a holiday
Euro/dollar: DOWN at $1.0874 from $1.0892 on Thursday
Pound/dollar: DOWN at $1.2395 from $1.2408
Euro/pound: DOWN at 87.65 pence from 87.78 pence
Dollar/yen: DOWN at 129.80 yen from 130.22 yen
Brent North Sea crude: DOWN 0.9 percent at $86.66 per barrel
West Texas Intermediate: DOWN 1.6 percent at $79.68 per barrel