By Johann M Cherian and Ankika Biswas
(Reuters) – Wall Street’s main indexes struggled for direction on Thursday, with a hotter-than-expected inflation print dampening hopes of early rate cuts, while U.S. regulatory approval for exchange-traded funds tracking spot bitcoin lifted crypto stocks.
The benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing the opening gains.
The index has recovered nearly 17% from its October lows, gathering steam in December after the Federal Reserve hinted it was reining in inflation and rate cuts were “coming into view”.
A U.S. Labor Department report showed consumer prices increased more than expected in December as rents maintained their upward trend.
“What this data really shows is that the path to a soft landing is not a straight line. The hotter-than-expected inflation number means investors have to rethink how many rate cuts the Fed will be able to pull off in 2024, and when,” said Brian Jacobsen, chief economist at Annex Wealth Management.
A separate report showed the number of Americans filing for unemployment benefits stood at 202,000 in the week ending Jan. 6, compared with an expectation of 210,000.
Futures contracts that settle to the Fed’s target for the overnight lending rate between banks fell after the data. Market participants now imply about a 60% chance of a March rate cut, versus the 70% chance seen before the data.
Meanwhile, Microsoft overtook Apple as the world’s most valuable company after the iPhone maker began 2024 with its worst start in years due to concerns over falling demand. Microsoft’s shares were up 0.7%, while Apple was down 0.9%.
Investors will also parse remarks by Richmond Fed President Thomas Barkin, a voting member this year, later in the day.
Crypto stocks like Coinbase Bitfarms and Riot Platforms advanced between 5% and 11% after the U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track spot bitcoin .
At 9:47 a.m. ET, the Dow Jones Industrial Average was down 27.71 points, or 0.07%, at 37,668.02, the S&P 500 was up 1.99 points, or 0.04%, at 4,785.44, and the Nasdaq Composite was up 30.36 points, or 0.20%, at 15,000.01.
Citigroup declined 2.7% after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, to be reported on Friday.
Other banks like JPMorgan Chase, Bank of America and Wells Fargo are also set to report on Friday.
Lyft lost 3% after Goldman Sachs downgraded the ride-hailing platform’s stock to “neutral” from “buy”.
Netflix rose 2.0% on a report that its ad-supported tier has reached more than 23 million active users per month globally.
Declining issues outnumbered advancers for a 1.35-to-1 ratio on the NYSE and a 1.31-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and one new low, while the Nasdaq recorded 32 new highs and 28 new lows.
(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Pooja Desai)
