In a day marked by volatility, US stocks rebounded from earlier losses on Thursday, ultimately closing the session flat. The shift in momentum followed the release of a fresh reading on December inflation, which exceeded economists’ expectations. This unexpected development has sparked renewed speculation regarding the Federal Reserve’s approach to interest rates.
The S&P 500 (^GSPC), which had dipped as much as 0.8% during the session, ultimately concluded the day with a marginal 3-point decrease. The Dow Jones Industrial Average (^DJI) managed to recover, gaining slightly over 30 points, while the Nasdaq (^IXIC) ended the session without significant changes. Notably, interest rate-sensitive sectors, including real estate and utility stocks, experienced declines.
Throughout the week, the stock market faced challenges as investors anxiously awaited the US consumer inflation reading for December. The report revealed a slightly more substantial increase than anticipated, with prices rising by 0.3% month over month and 3.4% year over year. On a “core” basis, excluding the volatile food and energy categories, inflation surged 3.9% over the past year.
This data was deemed crucial by traders who had been increasingly factoring in the likelihood of a “soft landing” – a scenario in which inflation recedes to 2% without triggering an economic downturn – since the last Consumer Price Index (CPI) report.
In a notable development on Thursday, US spot bitcoin Exchange-Traded Funds (ETFs) commenced trading, receiving regulatory approval from the Securities and Exchange Commission (SEC) on Wednesday. Bitcoin (BTC-USD) maintained a position above $46,000 per token, while its counterpart, ether (ETH-USD), experienced a surge amid speculations that it could be the next cryptocurrency to receive approval for an ETF.
Looking ahead, Citigroup (C) announced it would record more than $3 billion in one-time reserves and expenses in its quarterly financial update scheduled for Friday. This move is significant in the context of the fourth-quarter earnings season, which holds particular importance for stocks given their lackluster performance earlier in the year.
In a testament to market resilience, stocks recover from earlier losses, highlighting the dynamic nature of investor sentiment amid uncertainties surrounding inflation and Federal Reserve decisions. Traders and investors alike are carefully analyzing economic indicators and corporate updates to gauge the trajectory of the market in the coming weeks. As the fourth quarter earnings season unfolds, the market’s resilience in the face of challenges will likely play a crucial role in shaping investor sentiment and market dynamics moving forward.
Source: Yahoo Finance
