US stocks fall as inflation jumps more than expected


US stocks fell on Thursday morning despite a new December inflation reading that was slightly hotter than economists had expected, raising new questions about the Federal Reserve’s path on interest rates.

The S&P 500 (^GSPC) fell about 0.6% after the index ended Wednesday at its highest close since January 2022, 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 to the US consumer inflation reading for December. This reading showed a slightly larger jump than expected, as prices rose by 0.3% on a monthly basis and 3.4% on an annual basis. On a “core” basis, which excludes volatile food and energy categories, inflation rose 3.9% over the past year.

This reading was considered crucial for traders who have been increasingly calculating the odds of a “soft landing” – where inflation falls to 2% without an economic contraction – since the last CPI report.

Meanwhile, cryptocurrency stocks got a boost after the Securities and Exchange Commission granted regulatory approval for bitcoin ETFs in the US to begin trading on Thursday, which is seen as a game-changer for the sector. Shares in exchange Coinbase (COIN) and mining company Marathon Digital (MARA) were among those that rose in pre-market trading.

Bitcoin (BTC-USD) rose above $47,000 to trade at its highest levels since March 2022, while rival ethereum (ETH-USD) jumped amid bets that the second-largest token is next to get the ETF’s green light.

Ahead of its quarterly financial update on Friday, Citigroup (C) said it would take more than $3 billion in reserves and one-time expenses into the results. Q4 earnings season is crucial for stocks, given their poor performance so far this year.

He lives3 updates

  • Hotter-than-expected inflation doesn’t change Fed rate cut bets

    December’s inflation report came in a little hotter than Wall Street expected, but it did not move investors’ bets that the Fed’s first interest rate cut could come in March.

    As of early Thursday morning, markets were anticipating a roughly 67% chance that the Fed would cut interest rates in March, according to the CME FedWatch tool, largely unchanged from the odds a day earlier.

    “I don’t think postponing the cuts is enough,” Stephen Juneau, US economist at Bank of America, told Yahoo Finance Live. “We’re looking for a rally cut as a kind of kick in the cutting cycle. That kind of keeps the door open, and certainly doesn’t close the door.”

  • Stocks gain despite hotter-than-expected inflation print

    US stocks rose on Thursday morning despite a new December inflation reading that came in slightly hotter than economists had expected, raising new questions about the Federal Reserve’s path on interest rates.

    The S&P 500 (^GSPC) added about 0.2% after the index ended Wednesday at its highest close since January 2022, just short of setting a new record. The Dow Jones Industrial Average (^DJI) rose 0.1% while the tech-heavy Nasdaq led the way, up 0.3%.

  • Inflation rates are higher than expected in December

    Thursday’s inflation report showed that consumer prices rose slightly more than expected in November.

    A quick look at the numbers:

    • Core CPI, month-on-month: 0.3% increase vs. 0.2% expected

    • Core Consumer Price Index, YoY: 3.4% vs. 3.2% expected

    • “Core” CPI on an annual basis: 3.9% vs. 3.8% expected

    Yahoo Finance’s Josh Schaeffer has all the details here.

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