File Photo: A trader stands outside the New York Stock Exchange, Friday, Sept. 23, 2022, in New York. AP
The S&P 500 shook off an early loss and inched up 0.2% as of 10:27 a.m. Eastern. The Dow Jones Industrial Average was up 49 points, or 0.2%, to 33,079 and the Nasdaq fell 0.2%. The S&P 500 and Nasdaq are on track for a third straight week of losses.
Markets are heading for a long weekend and will be closed on Monday for the Christmas holiday.
The government reported Friday that a key measure of inflation is continuing to slow, though it's still far higher than anyone wants to see. The Federal Reserve monitors the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government's better-known consumer price index.
Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected. Markets are in a tricky spot where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Fed.
Treasury yields rose following the reports. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.74% from 3.69 late Thursday. The yield on the two-year Treasury, which tends to track actions by the Fed, rose to 4.32% from 4.28%.
The Fed has been upfront about its plan to remain aggressive in raising interest rates in order to tame inflation, even though the pace of price increases continue to ease. The Fed has already hiked its key overnight rate to its highest level in 15 years, after it began the year at a record low of roughly zero.
The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.
Their forecast doesn't call for a rate cut before 2024. The high rates have raised concerns that the economy could slow too much and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.
Inflation remains a global problem. Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world's third-largest economy.
Markets in Asia and Europe fell.