In a surprising turn of events, U.S. stocks displayed resilience on Thursday morning, managing to gain ground despite a fresh reading on December inflation data that exceeded economists’ expectations. This unexpected uptick in inflation has ignited new debates and uncertainties surrounding the Federal Reserve’s future decisions on interest rates.
The S&P 500 (^GSPC) showcased its strength by edging up about 0.2%, building on the momentum from the previous day when the benchmark concluded Wednesday at its highest close since January 2022. Although just shy of reaching a new record, the positive trajectory continued. Simultaneously, the Dow Jones Industrial Average (^DJI) posted a modest gain of 0.1%, and the tech-heavy Nasdaq outperformed, leading the way with a solid 0.3% increase.
This week, stocks faced challenges as investors anxiously awaited the release of the US consumer inflation data for December. The results surpassed expectations, revealing a 0.3% month-over-month increase and a 3.4% year-over-year surge. Examining the “core” inflation, which excludes the volatile food and energy categories, the figures showed a 3.9% rise over the past year.
Market observers considered this data critical, particularly for traders who have been increasingly factoring in the likelihood of a “soft landing.” A soft landing scenario involves inflation subsiding to 2% without triggering an economic downturn, and this expectation has been gaining traction since the last Consumer Price Index (CPI) report.
On a separate note, cryptocurrency stocks experienced a notable upswing following regulatory approval from the Securities and Exchange Commission (SEC) for U.S. spot bitcoin ETFs to commence trading on Thursday. This development is perceived as a game-changer for the sector. Notable gains were witnessed in premarket trading for shares of prominent players like Coinbase (COIN) and Marathon Digital (MARA).
Bitcoin (BTC-USD) surged beyond the $47,000 mark, reaching its highest levels since March 2022. Additionally, rival cryptocurrency ether (ETH-USD) saw an uptick, fueled by expectations that it could be the next token to receive approval for an ETF.
Looking ahead to the financial landscape, Citigroup (C) disclosed that it would incur over $3 billion in one-time reserves and expenses in its upcoming quarterly financial update on Friday. This announcement comes against the backdrop of a crucial fourth-quarter earnings season for stocks, given their lackluster performance thus far this year. Investors are keenly awaiting further insights into the financial health of major corporations, and Citigroup’s disclosure sets the stage for what could be a pivotal period for the market.
Source: Yahoo Finance
