Markets pushed higher Friday even as investor anxiety remained elevated, with the CNN Money Fear and Greed Index registering 40.4—essentially unchanged from Thursday's 40.6 reading and firmly planted in "Fear" territory. The slight uptick in nervousness didn't stop U.S. stocks from posting gains, though, as traders digested economic data that bolstered the case for a Federal Reserve rate cut this week.
The Dow Jones climbed roughly 104 points to close at 47,954.99, while the S&P 500 added 0.19% to finish at 6,870.40. The Nasdaq Composite gained 0.31%, ending the session at 23,578.13.
Inflation Data Fuels Rate Cut Expectations
The economic calendar delivered exactly what investors wanted to see. The core Personal Consumption Expenditures price index—the Fed's go-to inflation measure—ticked down from 2.9% to 2.8% year over year in September, coming in just below forecasts. That's the kind of cooling that keeps rate cut hopes alive.
According to the CME FedWatch tool, markets are now pricing in an 87% probability of a 25-basis-point rate reduction next week. Adding to the optimistic narrative, the University of Michigan's preliminary December consumer survey showed sentiment improving from 51 to 53.3, with inflation expectations softening further. Translation: consumers feel a bit better about things, and they think price pressures are easing.
Netflix Makes a Blockbuster Move
In corporate news, Netflix Inc. (NFLX) dropped 2.9% during a choppy trading session after unveiling plans to acquire Warner Bros. Discovery Inc. (WBD) in what amounts to a Hollywood mega-deal. The transaction values Warner Bros. Discovery at $27.75 per share, representing an equity value of approximately $72 billion. The acquisition includes Warner Bros.' film and television studios, plus HBO and HBO Max—giving Netflix control over an enormous content library and production infrastructure.
Earnings Winners and Losers
On the earnings front, Ulta Beauty Inc. (ULTA) shares rocketed 12.7% higher after the beauty retailer crushed analyst estimates and raised its full-year outlook. Investors clearly liked what they saw.
Meanwhile, ServiceTitan Inc. (TTAN) climbed 10.5% after reporting third-quarter financial results that topped expectations. The software company's performance gave investors reason to be optimistic about its growth trajectory.
Sector Performance Shows Mixed Picture
Despite the headline index gains, most sectors on the S&P 500 actually closed lower Friday. Utilities, health care, and energy stocks led the decline. The bright spots? Communication services and information technology stocks managed to finish in positive territory, providing enough lift to keep the broader market afloat.
Looking ahead, investors are gearing up for earnings reports from Toll Brothers Inc. (TOL), Phreesia Inc. (PHR), and Compass Minerals International, Inc. (CMP) this week.
Understanding the Fear and Greed Index
So what exactly is this Fear and Greed Index that's hovering in fear territory? Think of it as Wall Street's emotional thermometer. The index measures current market sentiment based on the premise that excessive fear tends to push stock prices down, while excessive greed drives them up.
The CNN Business Fear and Greed Index calculates its reading using seven equal-weighted indicators, producing a score between 0 and 100. A reading of 0 represents maximum fear, while 100 signals maximum greed. At 40.4, Friday's reading suggests investors remain cautious despite the day's gains—perhaps keeping one eye on the Fed decision and another on the broader economic uncertainties that continue to cloud the outlook.
