Miguel Santiago
US stocks experienced a choppy trading session on Thursday, with the major stock indexes in the red for much of the day following the latest consumer inflation report. The averages ultimately ended up mixed.
bitcoin (btc-USD) continued will be in the spotlight, briefly climbing the $49,000 mark following the long-awaited approval of exchange-traded funds linked to the cryptocurrency.
The tech-heavy Nasdaq Composite (IND COMP.) closed little changed at 14,970.19 points, having erased losses of up to ~1%. The blue-chip Dow (dji) added 0.04% to be located at 37,711.02 points.
Shortly after the start of regular trading, the benchmark S&P 500 Index (SP500) finally surpassed its record closing level to a session high of 4,798.50 points. concluded 0.07% less to 4,780.27.
Nine of the 11 S&P sectors ended in the red. technology and Energy were the two winners.
Before the opening bell, the US Bureau of Labor Statistics said the consumer price index (CPI) for December 2023 rose 0.3% month-on-month, above the consensus figure of +0 .2% and higher than November's +0.1% reading. The core CPI, which excludes food and energy, stood at +0.3% monthly, unchanged from November, but slightly above the estimate of +0.2%.
“Utilities, real estate, financials and industrials. These stocks performed the worst in a market taking in higher-than-expected inflation numbers today,” Leo Nelissen, part of the iREIT investment group in Alpha, told Searching Alpha.
“Although inflation figures were slightly above expectations, it appears that the market will have to adjust its outlook. Coming into this year, six rate cuts and no recession were priced in. As long as inflation remains strong, supported by key factors like housing and energy, the Fed will have to do more damage to the economy to achieve its goals,” Nelissen added.
According to the CME FedWatch tool, markets are pricing in a ~70% chance that the Fed will cut rates by 25 basis points starting in March.
“While the broader market did not suffer much damage today, cracks are starting to appear again in rate-sensitive sectors. As a long-term dividend investor, I am building a cash position to buy these weaker sectors in the coming months if I have the opportunity,” Nelissen said.
Treasury yields were mixed after the CPI data, then eased after a $21 billion 30-year bond auction closed. The 30-year yield (US30Y) fell 1 basis point to 4.19%, while the 10-year yield (US10Y) fell 4 basis points to 3.99%. The more rate-sensitive short-term 2-year yield (US2Y) fell 11 basis points to 4.26%.
See how Treasury yields have performed across the curve on the Seeking Alpha bond page.
Cryptocurrencies continued to get much of the attention on Thursday, a day after the U.S. Securities and Exchange Commission finally approved spot bitcoin exchange-traded funds (btc-USD) in what is seen as a decisive moment for digital currencies. The news briefly sent bitcoin (btc-USD) above the $49,000 mark, while cryptocurrency-related stocks posted solid gains.
In active stocks, Paramount Global (PARA) (PARAA) and Warner Bros. Discovery (WBD) finished among the top percentage losers in the S&P 500 (SP500), after Redburn Atlantic downgraded both stocks amid continued concerns about linear advertising.
