Market Watch: PCE, GDP, and Jobless Claims in Focus

As the fourth quarter unfolds, investors are keeping a close eye on several key economic indicators. The Personal Consumption Expenditures (PCE) index, the third-quarter GDP revision, and jobless claims data are among the most critical data points to monitor. These indicators offer valuable insights into the health of the U.S. economy and the potential trajectory of the stock market.

The PCE index, the Federal Reserve's preferred inflation gauge, is expected to rise 0.2% monthly and 2.8% annually in October. While this represents a modest increase, it remains below the Fed's 2% target, signaling a persistent disinflation trend. This data point will be closely watched, as it may influence the Fed's decision on further rate cuts. The central bank has been focused on achieving a soft landing, cooling inflation without triggering a recession. The PCE inflation rate may not deter the Fed from proceeding with another quarter-point cut in December, supporting the job market.



The third-quarter GDP revision, released on Wednesday, showed a robust 5.2% annualized pace, surpassing the initial 4.9% estimate and economist forecasts. This upward revision indicates a stronger U.S. economy than initially thought, driven by better-than-expected business investment and government spending. Despite a slight downward revision in consumer spending, the overall picture of a resilient, diverse economy emerges. This revision should bolster investor confidence in the U.S. economic outlook, supporting the stock market's recent resilience.

Jobless claims data, which has fallen to six-month lows, suggests a healthy labor market despite recent hurricanes and strikes. The four-week average of claims decreased to 221,000, reflecting relatively low layoffs. This data supports the Fed's decision to lower interest rates, aiming for a soft landing by cooling inflation without triggering a recession. By managing labor market dynamics, the Fed can ensure stability and predictability in the economy, which is crucial for investors seeking consistent growth.

Investors should pay close attention to these key indicators as they navigate the market in the coming months. The PCE inflation rate, Q3 GDP revision, and jobless claims data can provide valuable insights into the U.S. economy's strength and resilience, helping investors make informed decisions about their portfolios. As the year comes to a close, the focus will remain on these critical data points and their potential impact on the Fed's monetary policy and the broader market.