Inflation, corporate news and economic data rock markets | Nauris Treigys | Coins | January 2024
Thursday was a mixed day for U.S. stock markets as investors weighed the implications of a higher-than-expected inflation report, corporate news and economic data. With market sentiment remaining cautious, the three major indices ended the day with little change.
According to the Consumer Price Index (CPI) report, inflation rose 3.4% in December, hitting the highest since 1991, and the core inflation rate fell slightly to 3.9%. This has led investors to revise their expectations for a Fed rate cut in March, lowering the odds to around 65%. The main cause of inflation was the increase in the cost of shelter, car insurance and used cars. Energy and food prices also rose, while some categories, such as household and personal care products, fell.
On the corporate side, Microsoft attracted attention by becoming the most valuable company in the United States, with a market capitalization exceeding $2.875 trillion. apologize . On the other hand, banking stocks suffered losses, with JPMorgan, Bank of America, and Wells Fargo all falling ahead of their earnings releases. Citigroup also fell 1.8% after announcing one-time charges of more than $3 billion.
Coinbase, the largest U.S. cryptocurrency exchange, saw its stock price fall 6.7% after the SEC approved the first Bitcoin ETF to track the spot price of the digital currency. This represents the market’s reaction to regulatory changes in the cryptocurrency space.
The U.S. government budget deficit widened to $129 billion in December, well above the $85 billion deficit a year earlier and below market expectations. Spending rose 3% to a record $559 billion, driven by higher Social Security payments and higher public debt interest. Sales fell 6% to $429 billion.
The housing market faced some headwinds as the average interest rate on a 30-year fixed mortgage rose slightly to 6.66% due to rising Treasury yields. High mortgage rates and low inventory have made it more difficult for homebuyers to find affordable homes. Homebuyers are advised to look into existing state and local programs that offer down payment assistance.
The labor market strengthened as the number of Americans filing for unemployment benefits fell to 202,000. It is the lowest level since 1969 and falls far short of market estimates. Persistent assertions have also declined, giving the Fed more room to maintain its hawkish stance through 2024 if necessary. The 4-week moving average fell, easing weekly fluctuations.
The U.S. dollar index hit 102.6, the highest in almost a month. Recent data has supported the view that the Fed will delay cutting interest rates. The euro weakened against the dollar as US data contradicted expectations of a possible interest rate cut.
As usual in US markets, earnings season is kicked off by the biggest banks on Wall Street: JPMorgan, Bank of America, Wells Fargo and Citigroup. Market analysts expect JPMorgan EPS to increase to $3.71. Bank of America declines to $0.69. Wells Fargo increases to 1.18 (almost double). Citigroup falls to $1.01.
Markets on Thursday were influenced by a variety of factors, including inflation, corporate news and economic data. Investors were cautious as they adjusted their expectations and watched the actions of central banks, regulators and corporations.