In a turbulent trading session on Thursday, US stocks managed to recover from earlier losses, ultimately ending the day flat. This turnaround was spurred by a new reading on December inflation that exceeded economists’ expectations, sparking renewed speculation about the Federal Reserve’s stance on interest rates.
The S&P 500 (^GSPC), which had experienced a decline of up to 0.8% during the session, closed just 3 points lower. The Dow Jones Industrial Average (^DJI) saw a modest gain of over 30 points, while the Nasdaq (^IXIC) closed the session without significant change. However, sectors sensitive to interest rates, such as real estate and utilities, experienced declines.
Throughout the week, the stock market faced challenges as investors eagerly awaited the US consumer inflation reading for December. The results revealed a slightly larger jump than anticipated, with prices rising 0.3% month over month and 3.4% year over year. On a “core” basis, excluding the volatile food and energy categories, inflation increased by 3.9% over the past year.
This inflation print held particular significance for traders, as they had increasingly factored in the likelihood of a “soft landing,” where inflation retreats to 2% without triggering an economic downturn, since the last Consumer Price Index (CPI) report.
Simultaneously, the trading landscape saw the commencement of US spot bitcoin exchange-traded funds (ETFs) on Thursday, following regulatory approval from the Securities and Exchange Commission (SEC) the previous day. Bitcoin (BTC-USD) maintained its position above $46,000 per token, while its rival, ether (ETH-USD), experienced an upswing amid speculations that it might be the next cryptocurrency to receive approval for an ETF.
Looking ahead, Citigroup (C) announced that it anticipates incurring more than $3 billion in one-time reserves and expenses in its upcoming quarterly financial update on Friday. The fourth-quarter earnings season carries significant weight for stocks, given their lackluster performance throughout the year thus far. Investors will closely scrutinize these financial reports for insights into the overall health and outlook of the market.
In summary, Thursday’s trading session showcased the resilience of the US stock markets as stocks recover from earlier losses. The unexpected uptick in December inflation added a layer of uncertainty regarding the Federal Reserve’s approach to interest rates. Additionally, the introduction of US spot bitcoin ETFs marked a milestone in the cryptocurrency space, influencing the trading dynamics. As the market awaits key financial updates from companies like Citigroup, the trajectory of the stock market remains a focal point for investors navigating the complexities of the current economic landscape.
Source: Yahoo Finance
