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NEW YORK (AP) — Wall Street is adrift in mixed trading after Thursday’s trading. Latest information on inflation That has forced some investors to lower, but not abandon, their expectations for when the Federal Reserve will cut interest rates, which it has long wanted.
After swinging up and down several times throughout the day, the S&P 500 was essentially flat in late trading. With about an hour left in trading, the Dow Jones Industrial Average was up 40 points, or 0.1%, and the Nasdaq Composite Index was up 0.1%.
Stocks had soared to record highs on hopes that subdued inflation would persuade the Federal Reserve to cut rates sharply in 2024 and boost investment prices. Thursday morning’s inflation report was seen as a test of whether Wall Street’s expectations were overblown.
It found that U.S. consumers overall paid 3.4% more in December than in the same month last year. That accelerated from November’s inflation rate of 3.1% and was slightly higher than economists expected.
But behind-the-scenes trends may have been a little more encouraging. Subtracting food and fuel prices, which can fluctuate widely from month to month, price increases from November to December were closer to what economists expected.
Analysts said that, collectively, the data will likely cause traders to postpone their predictions for when the first rate cut will occur, but it will not derail the core expectations that have driven stocks near record levels. He said no. , and the economy seems likely to avoid a bad recession.
“Today’s inflation report confirms the view that markets were getting a little too excited about the timing of the rate cut,” said Seema Shah, chief global strategist at Principal Asset Management. “These are not bad numbers, but they do show that disinflation is still slow and unlikely to fall to 2% in a straight line.”
In the bond market, U.S. Treasury yields rose jaggedly in response to the inflation data. It fell from Wednesday night into Thursday, but spiked shortly after the report’s release as traders abandoned expectations for a first rate cut as early as March.
But then yields started rising rapidly. By late afternoon, stocks were falling again, helping to relieve pressure on the stock market as the index recovered much of its earlier losses.
The yield on the 10-year U.S. Treasury note fell to 3.98% from 4.04% late Wednesday. This is down from over 5% in October.
Economists at Bank of America said they are sticking to their expectations that the Fed will begin cutting interest rates in March despite the better-than-expected inflation numbers. In the BofA Global Research report, they said some of the drivers of the recent boom, particularly used cars, should fade in the coming months.
Higher oil prices narrowed the steep decline from earlier in the week and added some upward pressure on inflation and yields. Benchmark U.S. crude oil rose 65 cents to $72.02 a barrel. Brent crude, the international standard crude, rose 61 cents to $77.41 a barrel.
Also in the energy industry, shares rose 2.4% after natural gas producer Chesapeake Energy agreed to sell itself to Southwestern Energy in an all-stock deal worth $7.4 billion. Southwestern fell 2.8%.
Elsewhere on Wall Street, a list of charges levied against the fourth-quarter results related to everything from Argentina’s troubled economy to a previously disclosed special assessment by the Federal Deposit Insurance Corporation was detailed. Citigroup fell 1.9%.
Hertz Global Holdings expects a fundamental measure of profit to record a decline in the fourth quarter, after announcing it would sell about 20,000 electric vehicles to reduce its EV fleet by a third. It fell by 4.1%.
The price of cryptocurrency is Bitcoin Stocks fluctuated a day after U.S. regulators for the first time allowed trading in exchange-traded funds (ETFs) that hold digital currencies, as well as futures related to them. The hope in the cryptocurrency industry is that by making it easier to invest in Bitcoin, ETFs will attract new types of investors to the space, including retirement savers and large institutions.
Coinbase Global, which stores Bitcoin in some ETFs, rose at the start of trading, but has since given up gains. It had recently fallen 5.5%.
In overseas stock markets, indexes were mixed.
Tokyo’s Nikkei Stock Average rose 1.8%, ending at its highest level since February 1990, when Japan’s bubble economy, which had inflated real estate and stock prices, began to deflate. Meanwhile, most European indexes fell.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
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