U.S. stocks fell on Thursday morning even though December’s inflation rate was slightly higher than economists expected, raising new questions about the Federal Reserve’s interest rate policy.
The S&P 500 Index (^GSPC) fell about 0.6% on Wednesday after the benchmark closed at its highest close since January 2022, but fell just short of setting a new record. The Dow Jones Industrial Average (^DJI) and Nasdaq (^IXIC) fell 0.6%.
Stocks struggled this week as investors counted down December’s U.S. consumer inflation data. This measure showed a slightly larger than expected increase as prices rose 0.3% month-over-month and 3.4% year-over-year. On a “core” basis, which excludes the volatile food and energy sectors, inflation rose 3.9% over the past year.
The print publication was seen as important for traders, who have been increasingly pricing in the possibility of a “soft landing” (inflation retreating to 2% without a recession) since the last CPI report.
Meanwhile, crypto stocks rose after the SEC gave regulatory approval to begin trading in a U.S. spot Bitcoin ETF on Thursday, in what looks to be a game-changer for the sector. Shares of exchanges Coinbase (COIN) and Miner Marathon Digital (MARA) were among the stocks that rose in pre-market trading.
Bitcoin (BTC-USD) trades above $47,000, its highest since March 2022, while rival Ether trades above $47,000 amid bets that the second-largest token will be the next to be greenlit for an ETF. (ETH-USD) has soared.
Ahead of Friday’s quarterly earnings report, Citigroup (C) announced that it would take more than $3 billion in one-time provisions and expenses to close the year. Given the lackluster performance so far this year, fourth-quarter earnings season is crucial for stocks.
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Bitcoin ETF trading begins
Trading of the long-awaited Sports Bitcoin ETF has begun.
Yahoo Finance’s curated list tracks all actions on ETFs. Among the newly issued ETFs, BlackRock’s iShares Bitcoin ETF (IBIT) is showing the highest volume in morning trading.
Amid the ETF action, Bitcoin (BTC-USD) was trading around $46,700.
Below is a breakdown of the various fees charged for each ETF.
Expectations for Fed rate cuts remain unchanged even if inflation rises more than expected
December’s inflation report was slightly higher than Wall Street expected, but it hasn’t swayed investors’ view that the Fed’s first rate cut could come in March.
As of Thursday morning, the market was pricing in a roughly 67% chance that the Fed would cut interest rates in March, unchanged from the previous day’s odds, according to the CME FedWatch tool.
“I don’t think just delaying the rate cut will be enough,” Bank of America U.S. economist Stephen Juneau told Yahoo Finance Live. “We’re looking for a march cut that starts the cut cycle. It’s like leaving the door open. We’re never slamming the door shut.”
U.S. stocks rose on Thursday morning despite new data showing December inflation was slightly higher than economists expected, and the Federal Reserve’s interest rate policy A new question arose.
The S&P 500 (^GSPC) rose about 0.2% on Wednesday after the benchmark closed at its highest close since January 2022, just shy of setting a new record. The Dow Jones Industrial Average (^DJI) rose 0.1%, and the tech-heavy Nasdaq led the way with a 0.3% rise.
Inflation rate exceeded expectations in December
Thursday’s much-anticipated inflation report showed consumer prices rose slightly more than expected in November.
Let’s take a quick look at the numbers:
Composite CPI, month-over-month: up 0.3% versus expected 0.2%
Total CPI, YoY: 3.4% vs. expected 3.2%
“Core” CPI, YoY: 3.9% vs. expected 3.8%
Yahoo Finance’s Josh Schafer has all the details here.
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