The SPDR S&P 500 ETF Trust SPY traded higher Friday after the latest reading of consumer confidence suggests rising prices and economic uncertainty are negatively impacting U.S. consumers.
What Happened: The University of Michigan has announced the preliminary results of its November Survey of Consumers. The index for consumer sentiment was down 18.8% year-over-year and 8.7% compared to October. The index for economic conditions was also down 21.5% year-over-year and 11.9% on a monthly basis.
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The consumer sentiment index has now given up half its gains since hitting an all-time low in June. The data suggests consumers are becoming increasingly concerned about inflation, economic uncertainty and sluggish financial markets.
The University of Michigan reported the index for consumer expectations dropped 6.2% compared to October and is down 17% from a year ago.
Why It Matters: On Thursday, the S&P 500 rallied by 5.5% after the U.S. consumer price index gained just 7.7% in October, below economist expectations of 7.9% inflation.
The University of Michigan reported Friday that the median expected year-ahead inflation rate among consumers is 5.1%, up from 5% in October.
While inflation may finally be subsiding, it's still at multi-decade highs. It remains to be seen just how much inflation concerns will impact consumer spending during the upcoming holiday shopping season.
Investors will get their next key economic update Wednesday when the U.S. Census Bureau releases its October Retail Sales report.
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