US stocks slipped on Thursday morning despite a fresh reading on December inflation 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) fell about 0.8% after the benchmark ended Wednesday at its highest close since January 2022, just short of notching a new record. The Dow Jones Industrial Average (^DJI) slid 0.6% and the Nasdaq (^IXIC) led the losses, falling almost 0.9%.
Stocks have struggled this week as investors counted down to the US consumer inflation reading for December. That reading showed a slightly bigger jump than expected, as prices ticked up 0.3% month over month and 3.4% year over year. On a “core” basis, which excludes the volatile food and energy categories, inflation rose 3.9% over the past year.
The print was seen as critical for traders who have been increasingly pricing in the odds of a “soft landing” — where inflation retreats to 2% without an economic downturn — since the last CPI report.
Meanwhile, US spot bitcoin ETFs (full list here) began trading on Thursday after the SEC gave regulatory approval on Wednesday.
Bitcoin (BTC-USD) climbed above $46,000 to trade at its highest levels since March 2022, while rival ether (ETH-USD) jumped amid bets the second-biggest token is next to get the ETF green light.
Ahead of its quarterly financial update on Friday, Citigroup (C) said it will take more than $3 billion in one-time reserves and expenses in the results. The fourth-quarter earnings season is crucial for stocks, given their dismal performance this year so far.
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Oil surges as Middle East tensions rise
Oil futures spiked on Thursday after Iran seized an oil tanker in the gulf of Oman, fueling worries of escalating tensions between the US and Tehran.
West Texas Intermediate (CL=F) advanced more than 3% during the morning session. Brent (BZ=F) futures also rose more than 2.5%, trading above $78 per barrel.
“The Geopolitical escalation in the Red Seas area has once again reversed the bearish futures tilt,” Dennis Kissler, senior vice president at BOK Financial, said on Thursday.
Thursday’s price action was a change in direction from the the prior session when futures slid more than 1% following the release of weekly storage data. The Energy Information administration said US crude inventories grew by 1.34 million barrels last week.
Bitcoin ETFs begin trading
The long awaited trading of sport Bitcoin ETFs is underway.
A curated list on Yahoo Finance is tracking all the action on the ETFs. Of the newly issued ETFs, BlackRock’s iShares Bitcoin ETF (IBIT) is seeing the highest volume in morning trade.
Bitcoin (BTC-USD) was trading around $46,700 amid the ETF action.
Below is a breakdown of the various fees attached to each ETF.
Hotter than expected inflation not moving Fed rate cut bets
December’s inflation report came in slightly hotter than Wall Street expected, but it’s not moving investor bets that the Fed’s first interest rate cut could come in March.
As of early Thursday morning, markets priced in a roughly 67% chance that the Fed cuts interest rates in March, per the CME FedWatch Tool, largely unchanged from the odds a day prior.
“I don’t think it’s enough to delay cuts,” Bank of America US economist Stephen Juneau told Yahoo Finance Live. “We’re looking for a march cut to kind of kick off the cutting cycle. This kind of keeps the door open. it definitely doesn’t slam the door shut.”
Stocks gain despite hotter than expected inflation print
US stocks gained on Thursday morning despite a fresh reading on December inflation 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 benchmark ended Wednesday at its highest close since January 2022, just short of notching a new record. The Dow Jones Industrial Average (^DJI) added 0.1%, while the tech-heavy Nasdaq led the way, gaining 0.3%.
Inflation ticks higher than expected in December
Thursday’s highly anticipated inflation report showed that consumer prices increased slightly more than expected in November.
A quick look at the numbers:
Headline CPI, month over month: 0.3% increase vs. 0.2% expected
Headline CPI, year over year: 3.4% vs. 3.2% expected
“Core” CPI, year over year: 3.9% vs. 3.8% expected
Yahoo Finance’s Josh Schafer has all the details here.
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