Wall Street remained near its record levels on Thursday following a U.S. inflation report that showed warmer-than-expected data. The S&P 500 traded close to flat at 4,785, just below its all-time high of 4,796.56 set two years ago. The Dow Jones Industrial Average was down 0.1%, and the Nasdaq composite was 0.2% higher.
Investors had hoped for a significant cooldown in inflation to prompt the Federal Reserve to cut interest rates, boosting investment prices. The inflation report, revealing a 3.4% year-over-year increase in consumer prices for December, tested these expectations. Although slightly higher than anticipated, when excluding volatile food and fuel prices, the rise in prices matched economists’ expectations.
The data is likely to delay expectations for the first interest rate cut, but overall, the market sentiment remains positive. Analysts suggest that while the inflation progress is slow, the economy appears poised to avoid a severe recession.
Seema Shah, Chief Global Strategist at Principal Asset Management, stated, “Today’s inflation report reinforces the notion that the market had gotten a little overexcited around the timing of rate cuts. These are not bad numbers, but they do show that disinflation progress is still slow and unlikely to be a straight line down to 2%.”
Following the report, Treasury yields rose temporarily, but they later fluctuated. The 10-year Treasury yield increased to 4.03% from 3.98%, though it was still down from Wednesday’s 4.04%. Lower yields ease pressure on the stock market, with the 10-year yield significantly lower than its October level of 5%.
Oil prices rose, impacting inflation and yields, as U.S. crude increased 2.2% to $72.95 a barrel, and Brent crude gained 1.9% to $78.24. Chesapeake Energy saw a 3.9% jump after agreeing to a $7.4 billion all-stock sale to Southwestern Energy.
In the cryptocurrency market, bitcoin reached around $49,000 after U.S. regulators permitted trading of the first exchange-traded funds holding the digital currency.
Global stock markets had mixed performances, with Tokyo’s Nikkei 225 rising 1.8% to its highest level since February 1990.
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