Wall Street little changed after inflation, labour market data

NEW YORK: US stocks closed little changed on Thursday (Jan 11) as news of hotter-than-expected inflation and signs of labour market strength dampened hopes for early interest rate cuts by the Federal Reserve (Fed) this year, but a fall in Treasury yields kept declines in check.

The Dow Jones Industrial Average rose 15.29 points, or 0.04%, to 37,711.02, the S&P 500 lost 3.21 points, or 0.07%, to 4,780.24 and the Nasdaq Composite added 0.54 points to 14,970.19.

In a choppy session, equities opened higher and the benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing initial gains.

After ending 2023 with a strong rally, stocks have struggled to find upward momentum, with the S&P 500 up only 0.21% on the year, as mixed economic data and Fed officials' comments have led investors to scale back expectations for the timing and size of any rate cuts from the U.S. central bank this year.

The US Labor Department reported that consumer prices rose more than expected in December, with Americans paying more for shelter and healthcare. A separate report showed the number of people filing new claims for unemployment benefits unexpectedly fell last week to 202,000.

“They’re just understanding it for what it was. The thing that pushed it up was primarily shelter,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

“Nobody believes that is going to be a persistent go-forward problem apart from inflation, so the thing that drove the ‘hot print’ was something that everybody’s kind of discounting.”

Comments from some Fed officials have pushed back on potential rate cuts. On Thursday, Cleveland Fed president Loretta Mester and Richmond Fed president Tom Barkin said consumer price data for December did little to assure them inflation is now on a steady track back to the central bank’s 2% target, with more information needed before any decision to begin reducing rates.

A fall in Treasury yields helped keep losses for equities in check, after an auction of US$21 billion in 30-year bonds was well received.

“People are still worried about supply in the Treasury market. ... Is there going to be sufficient demand to soak that all up? And especially at the long end, the real fear is at the long end and the auction today, it was just perfect,” said Ladner.

Microsoft briefly overtook Apple as the world’s most valuable company, after the iPhone maker's shares dropped nearly 4% since the year began due to concerns over falling demand. Microsoft’s shares rose 0.49%, while Apple shed 0.32%.

Nearly all of the S&P 500's 11 major sectors declined, with only energy and technology in positive territory, up 0.16% and 0.44%, respectively.

Crypto stocks reversed early gains and tumbled, with names such as Coinbase off 6.7%, Bitfarms down 13.33% and Riot Platforms 15.82% lower. The US securities regulator approved the first US-listed exchange-traded fundsvto track spot bitcoin late on Wednesday.

Citigroup fell 1.77% after a filing showed the lender booked about US$3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, due to be reported on Friday.

Other banks including fell, with JPMorgan Chase, down 0.42%, Bank of America, down 1.33% and Wells Fargo off 0.08% ahead of their earnings reports on Friday. – Reuters