US consumer spending, inflation and the labor market all cooled in recent weeks — adding to evidence that growth is gradually slowing. The core personal consumption expenditures price index, the Fed’s preferred gauge of underlying inflation, met economists’ estimates.

“This is likely to cement expectations that the monetary policy inflection point is close, and the Fed will make at least one rate cut in the first six months of 2024,” said Sonu Varghese, global macro strategist at Carson Group. “Fed officials have already acknowledged that inflation is easing, and that can happen in the face of a strong economy and low unemployment, essentially laying the groundwork for rate cuts.”

While that perception is what essentially triggered the rally across several asset classes in November, concern about an “overbought” market has kept many equity investors sidelined over the past week. The S&P 500 is still on track for one of its biggest November gains on record — with the index climbing more than 8% fewer than 10 times since 1928, according to data compiled by Bloomberg. It’s also the gauge’s best month since July 2022.

For now, it’s a bull market until proven otherwise, according to Callie Cox at eToro.

“Powell and Fed presidents are talking openly about the progress in inflation and the prospect for cuts. As long as the Fed’s narrative sticks, the yearning for rate cuts could continue through rate-sensitive sectors,” she said. “Tread carefully, though. The economy is slowing, and a recession is still a risk.”

In a favorable sign for equity optimists, a Bloomberg Intelligence model known as the Economic Regime Index shows that the worst of America’s economic pain appears to have passed.

The index dropped back into recession territory last month after showing nearly a full rebound earlier this year from its trough in late 2022. While the model still signals potential economic weakness ahead, as long as it stays above its lows the outlook is favorable for the S&P 500, says Gina Martin Adams, chief equity strategist at BI.

“As an exceptional November comes to a close, among the frequent client questions on the road this week was whether a very strong November historically steals performance from the typical December Santa Claus rally,” said Chris Verrone at Strategas. “Not really.”

There’s a clear bias that a very weak November performance has been followed by a strong December showing, he noted. But there’s very little difference in the remaining 90% of the data. December performance is about even following very strong gains in November versus the average November, Verrone added.

Investors have also piled heavily into bonds this month. The Bloomberg US Aggregate index — which tracks investment-grade government and corporate debt — has gained almost 5% in November — heading toward its best performance since the 1980s. The gauge recently flipped higher for the year after posting a record loss of 13% in 2022.

“Buy the rumor, sell the fact,” said Andrew Brenner at NatAlliance Securities. “Everyone was expecting a good PCE number, but when it happened everyone was already long. Indigestion.”

Traders kept a close eye on the latest remarks from US officials. Fed Bank of New York President John Williams reiterated the benchmark lending rate is at or near its peak and said policy is “quite restrictive.” His San Francisco counterpart Mary Daly said rates are in a “very good place” to control inflation, though she’s not thinking about cuts and that it was too soon to say if hikes are finished.

“It is still too early to eliminate the tightening bias in the Fed’s forward guidance,” said Brian Rose, senior US economist at UBS Global Wealth Management. “Fed Chair Jerome Powell will make a public appearance on Friday, and we expect him to be careful to avoid sounding too dovish.”

Corporate Highlights:

• Tesla Inc. is finally ready to hand its Blade Runner-esque Cybertrucks over to customers. Chief Executive Officer Elon Musk was due to deliver the first vehicles at the company’s Austin headquarters as part of a live-streamed launch event starting at 2 p.m. local time.
• Ford Motor Co. restored financial guidance Thursday, saying profits would come in lower than earlier projections due to rising labor costs from its new contract with the United Auto Workers union.
• Billionaire Nelson Peltz’s Trian Fund Management LP plans to seek board representation at Walt Disney Co. following the entertainment company’s rejection of its request for seats.
• Meta Platforms Inc. sued the US Federal Trade Commission claiming its in-house trials violate the Constitution and asked a court to immediately halt the agency’s bid to change a 2020 privacy settlement.
• AbbVie Inc. agreed to acquire ImmunoGen Inc. for $10.1 billion in a move aimed at gaining access to some of the hottest new drugs in the growing cancer market.
• Occidental Petroleum Corp. is in talks to buy closely held shale driller CrownRock LP, according to people familiar with the matter, as consolidation in North America’s most prolific oil field gathers pace.
• Salesforce Inc. gave a profit forecast for the current quarter that topped analysts’ estimates, showing strong momentum in its cost-cutting campaign.
• Snowflake Inc. gave a product sales outlook for the current quarter that beat expectations, fueling hope that revenue has stabilized after the software maker experienced a dramatic slowdown in growth during the past year.

Key events this week:

• China Caixin Manufacturing PMI, Friday
• Eurozone S&P Global Manufacturing PMI, Friday
• US construction spending, ISM Manufacturing, Friday
• Fed Chair Jerome Powell to participate in “fireside chat” in Atlanta, Friday
• Chicago Fed President Austan Goolsbee speaks, Friday

Stocks

• The S&P 500 was little changed as of 11:32 a.m. New York time
• The Nasdaq 100 fell 0.8%
• The Dow Jones Industrial Average rose 0.9%
• The Stoxx Europe 600 rose 0.5%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.5% to $1.0909
• The British pound fell 0.4% to $1.2648
• The Japanese yen fell 0.4% to 147.82 per dollar

Cryptocurrencies

• Bitcoin fell 0.2% to $37,652.77
• Ether rose 0.3% to $2,034.9

Bonds

• The yield on 10-year Treasuries advanced seven basis points to 4.32%
• Germany’s 10-year yield advanced two basis points to 2.45%
• Britain’s 10-year yield advanced seven basis points to 4.17%

Commodities

• West Texas Intermediate crude fell 3.2% to $75.33 a barrel
• Spot gold fell 0.3% to $2,038.83 an ounce