By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes fell in choppy trading on Thursday after a hotter-than-expected inflation print dampened hopes of early interest-rate cuts by the U.S. Federal Reserve.

The benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing opening gains.

The index has recovered nearly 17% from its October lows, gathering steam in December after the Fed 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.

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.

“With all the key data now in hand, it’s hard to see how the January FOMC meeting would result in guidance to ease at the subsequent meeting in March,” said Michael Feroli, chief U.S. economist at J.P.Morgan.

“Perhaps the (Fed) committee could soften the guidance toward a neutral bias, but that would be more consistent with easing further on in the year.”

Hopes of a rate cut in March were kept alive after inflation measures tracked by the Fed showed a significant improvement over 2023, with the November personal consumption expenditure index posting its first monthly decline in more than three-and-a-half years.

However, Cleveland Fed President Loretta Mester said the rocky path of inflation back to the 2% target rate reflected in the latest CPI figures meant that it was likely too soon to cut rates in March.

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 slipped 0.5%, while Apple was down 1.1%.

Other megacaps like Tesla, Meta Platforms and Nvidia also lost between 0.9% and 3.3%.

At 11:28 a.m. ET, the Dow Jones Industrial Average was down 232.34 points, or 0.62%, at 37,463.39, the S&P 500 was down 36.35 points, or 0.76%, at 4,747.10, and the Nasdaq Composite was down 136.40 points, or 0.91%, at 14,833.25.

Ten of the S&P 500’s 11 sectors were in decline, with only the energy sector edging 0.4% higher, rebounding from three straight days of losses.

Crypto stocks like Coinbase, Bitfarms and Riot Platforms also reversed early gains, falling between 6.2% and 9.9%. The U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track spot bitcoin late on Wednesday.

Citigroup declined 2.6% 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 lost between 0.8% and 2.1% ahead of reporting earnings on Friday.

Netflix rose 1.9% 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 3.11-to-1 ratio on the NYSE and a 3.27-to-1 ratio on the Nasdaq.

The S&P index recorded 32 new 52-week highs and one new low, while the Nasdaq recorded 39 new highs and 88 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Pooja Desai)

(Reuters) -The U.S. Food and Drug Administration said on Thursday its preliminary review did not find evidence that weight-loss drugs such as Novo Nordisk’s Wegovy were tied to suicidal thoughts.

Still, the agency, which has listed suicidal thoughts as a potential safety signal for such drugs, said it could not definitively rule out that a small risk may exist as it continues to study the issue.

Wegovy and Eli Lilly’s Zepbound belongs to a class of drugs known as GLP-1 agonists, originally designed for type 2 diabetes. In addition to helping control blood sugar levels, they trigger a feeling of fullness.

A large U.S. study last week found no evidence that taking Novo Nordisk’s Ozempic or Wegovy is tied to an increase in suicidal thoughts.

Concerns over reports of suicidal thoughts associated with semaglutide, the active ingredient in Wegovy and Ozempic, triggered an investigation by the European Medicines Agency last year. The European regulator has asked for more information from Novo Nordisk in December.

The FDA said its months-long evaluation of clinical trials, as well as its public dashboard called the FDA Adverse Event Reporting System (FAERS) did not show a clear relationship between the drugs and suicidal thoughts or actions.

The agency said it would announce its final conclusions and recommendations after the completion of the review.

Healthcare providers like doctors should monitor their patients for new or worsening depression, suicidal thoughts, or any unusual changes in mood or behavior, consistent with the prescribing information for the drugs, the FDA said.

Demand for Novo’s obesity drug Wegovy and diabetes drug Ozempic, widely used off-label, has overwhelmed the Danish drugmaker and has left it scrambling to boost output.

Eli Lilly’s Zepbound, which uses the same active ingredient as its diabetes drug Mounjaro, was approved by the FDA in November.

Lilly CEO David Ricks said on Monday Zepbound hit 25,000 new prescriptions per week at the end of December, and that its 2024 supply may not be enough to meet demand.

(Reporting by Manas Mishra in Bengaluru; Editing by Shailesh Kuber and Sriraj Kalluvila)

By Nathan Gomes and Joseph White

(Reuters) -Rental firm Hertz Global Holdings said on Thursday it would sell about 20,000 electric vehicles, including Teslas, from its U.S. fleet due to higher expenses related to collision and damage, and will opt for gas-powered vehicles.

Shares of the company, which also operates vehicles from Swedish EV maker Polestar among others, fell about 4%. Tesla’s stock was down about 3%.

Hertz also expects to book an about $245 million charge related to depreciation expenses from the proposed EV sale in the fourth quarter of 2023.

Hertz’s decision underscores the bumpy road EVs have hit as the growth rate on sales of those vehicles has slowed, causing carmakers like General Motors and Ford to scale back production plans of those vehicles.

Morgan Stanley analyst Adam Jonas in a note said the car rental firm’s move was a warning across the EV space and it was another sign that EV expectations need to be “reset downward across the market.”

“While consumers enjoy the driving experience and fuel savings (per mile) of an EV, there are other ‘hidden’ costs to EV ownership,” Jonas added.

Hertz had said it would order 100,000 Tesla vehicles by the end of 2022 and followed that with a decision to buy up to 65,000 units over five years from Polestar.

“Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter,” Hertz said in a regulatory filing on Thursday.

German rental car company Sixt said in December that it had not purchased Tesla vehicles since 2022 and is selling its fleet of Teslas “as part of our regular de-fleeting process”.

Sixt said on Thursday it still plans to offer a range of electrified vehicles and “stick to our goal to electrify 70-90 percent of our rental fleet in Europe by 2030.”

Hertz said it would continue to focus on improving profitability for the remainder of its EV fleet.

Wholesale used-EV prices fell for most of 2023 as prices for new EVs fell and inventories of unsold electric vehicles rose, according to Cox Automotive data.

Cox forecast before Hertz’s announcement that used-EV prices would decline more than overall used vehicle prices during 2024.

“While 20,000 cars isn’t a large number in the total used vehicle market, it does mean Hertz will be taking a major loss on each of these sales while further contributing to the trend of falling used EV values,” iSeeCars.com analyst Karl Brauer said.

The car rental firm is selling some Tesla Model 3 for as low as about $20,000, nearly half the purchase price for the cheapest variant of the compact sedan.

Hertz previously set a target for 25% of its fleet to be electric by the end of 2024.

The company’s used car website lists more than 700 EVs on sale including BMW’s i3, Chevrolet’s Bolt and Tesla’s Model 3 and Model Y SUVs.

Polestar did not immediately respond to a request for comment.

(Reporting by Nathan Gomes and Akash Sriram in Bengaluru, Joe White in Detroit; Editing by Shilpi Majumdar, Sriraj Kalluvila and Maju Samuel)

By Alexandra Valencia

QUITO (Reuters) – Ecuador’s president has declared war on drugs gangs holding scores of prison guards hostage in a wave of violence that saw the storming of a TV station on-air and explosions around the nation.

The unrest appears to be in response to President Daniel Noboa’s efforts to tackle cocaine trafficking, in particular by putting gang leaders in new high-security prisons.

“We are at war and we cannot cede in the face of these terrorist groups,” Noboa, the 36-year-old son of a banana baron in power since November, said on Wednesday.

His government has declared a state of emergency, sent the military after 22 gangs named as terrorist organizations, and said about 20,000 criminals are involved.

Since Monday, gangs have kidnapped more than 130 prison guards and staff. That followed the apparent escape of notorious “Los Choneros” gang leader Adolfo Macias from prison.

With unexplained blasts occurring in various cities, balaclava-clad gunmen with grenades and dynamite briefly took over the TC broadcaster in the Pacific Ocean port city Guayaquil on Tuesday during a news program, before police arrested them and freed the media staff.

“It was surreal,” said journalist Jose Luis Calderon, 47, who at one point was obliged to appear on camera at gunpoint at the TV studio.

Calderon told Reuters that at first he hid in the bathroom with others, but they were found and forced into the studio by the assailants. When police gunshots were heard outside, some colleagues begged for their lives.

“The individuals shot their guns, I think in reaction to the police, and they shot a door and one of the bullets ricocheted and injured the leg of a cameraman,” Calderon said.

HUNDREDS OF DETENTIONS

A colleague recounted how dozens of journalists cowered on the floor, some praying. “I thought it was my last day on earth and I wouldn’t see my children again,” Alina Manrique said.

The armed forces commander, Rear Admiral Jaime Vela, told a news conference late on Wednesday that 329 people, mostly from gangs including Los Choneros, Los Lobos and Los Tiguerones, have been detained since the state of emergency began this week.

In response to videos purporting to show prison staff being subjected to extreme violence, including shooting and hanging, he said no hostage had been killed.

Reuters could not immediately verify the videos.

Prisons agency SNAI said 125 guards and 14 administrative staff remain hostages, with 11 people freed on Tuesday.

Police said nine officers were kidnapped in recent days, with three still being held.

Showing determination to press on with his security policies, Noboa told Canela Radio a design for two new prison facilities would be made public on Thursday.

The president said deportations of foreign prisoners, especially Colombians who number 1,500 in Ecuador’s jails, would begin this week to ease overcrowding and costs.

“We are investing more on those 1,500 people than on school breakfasts for our children,” he said.

INTERNATIONAL ALARM

Ecuador borders cocaine-producing Colombia and Peru and has become a major shipment point. Both its neighbors have stepped up controls on their frontiers.

China, a major investor, has closed its embassy and consulates.

Washington has pledged aid, said Noboa, whose $800 million security plan includes $200 million of weapons from the U.S.

Peru is investigating possible smuggling by its military of explosives and grenades for Ecuador’s gangs.

Ecuador’s government says the oil and mining sectors are functioning normally and has sent security forces to ports to protect exports like fruit and cocoa.

Soldiers and police have been raiding homes, beefing up checkpoints, and entering prisons.

“The challenge for Noboa will be to make lasting headway in the fight against crime beyond any immediate-term, military-led pacification,” consulting firm Teneo said in a note.

Many businesses and schools have closed, with city streets quiet as police and soldiers patrolled.

“It’s a very cold environment, as if there were a new COVID,” said Guayaquil security guard Rodolfo Tuaz, 40.

“It’s nerve-racking, we cannot work in these conditions,” said another resident, Gabriel Narvaez.

In anti-gang operations, five gang members were killed in Esmeraldas province, national police commander General Cesar Zapata said, without giving more details.

Police were also seeking to identify three bodies in a burned-out car south of Guayaquil, and two officers were killed by armed men in Guayas province where Guayaquil is located.

(Reporting by Alexandra Valencia in Quito; Additional reporting by Herbert Villarraga in Guayaquil, Marco Aquino in Lima and Julia Symmes Cobb and Luis Jaime Acosta in Bogota; Writing by Julia Symmes Cobb and Andrew Cawthorne; Editing by Angus MacSwan)

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)

(Reuters) – The S&P 500 briefly rose above its record closing high on Thursday, as investors gauged the likelihood of rate cuts early this year after latest data showed inflation ticking higher in December.

The benchmark index went up to 4,798.50 points earlier in the session, breaching its record closing high of 4,796.56, hit in January 2022. It was last up 6.84 points, or 0.14%, at 4,790.29.

(Reporting by Amruta Khandekar; Editing by Pooja Desai)

(Reuters) – Futures tracking Wall Street’s main indexes turned negative on Thursday as hotter-than-expected consumer inflation dampened expectations of an early start to interest-rate cuts.

Data showed the headline CPI rose 3.4% in December on a yearly basis versus a 3.2% increase expected by economists polled by Reuters. On a monthly basis, it rose 0.3% versus the anticipated 0.2% increase.

Core CPI, excluding volatile items like food and energy, rose 3.9% year-on-year versus expectations of a 3.8% increase.

A separate report showed jobless claims rose to 202,000 in the week ended Jan. 6 compared with an expected 210,000 increase.

At 8:31 a.m. ET, Dow e-minis were down 76 points, or 0.2%, S&P 500 e-minis were down 10 points, or 0.21%, and Nasdaq 100 e-minis were down 19.5 points, or 0.12%.

(Reporting by Ankika Biswas in Bengaluru; Editing by Arun Koyyur)

By Victoria Waldersee

BERLIN (Reuters) -German premium carmakers reported sales at or above forecasts for 2023, with BMW topping deliveries but Mercedes-Benz set for the highest returns margin, in a sign of varying strategies towards going electric.

Volkswagen’s Audi began closing in on competitors with total unit sales of 1.9 million vehicles, but battery-electric sales remained far behind at 178,000 to BMW’s of more than 375,000 and 240,600 at Mercedes-Benz.

Mercedes said on Thursday its fourth-quarter sales took a hit from supply constraints and model changeovers, but full-year car deliveries were in line with its forecast at 2 million.

Its group sales rose 1.5% to just under 2.5 million, but fourth-quarter sales were down 3% for the group and 4% in the cars division as a shortage in 48-volt battery systems and a model changeover for its E-Class limited output.

The carmaker warned over the course of 2023 of supply snags and inflation weighing on sales, with price wars particularly in the electric vehicle segment placing pressure on margins.

Its battery-electric passenger car sales rose 73% over the year to 222,600, but battery-electric sales of its smart fortwo and smart forfour models fell 12%.

Still, it has said it expects to hit the lower end of its 12-14% forecasted adjusted returns margin when it reports full-year financial results on Feb 22.

BMW, which hit record sales of over 2.5 million cars this year, set expectations lower with an earnings margin forecast of 9-10.5% but has said it expects to hit the higher end of that range.

Audi has promised a boost in this year’s electric car sales as a series of new models, including the Q6 e-tron – originally due for release in 2022 – are due to hit the market.

Its margin is forecast at the lower end of 9-11%.

(Reporting by Victoria Waldersee; Editing by Miranda Murray and Alexander Smith)

By Johann M Cherian and Ankika Biswas

(Reuters) – Futures on the tech-heavy Nasdaq rose on Thursday, as Treasury yields slipped ahead of an inflation print that could test hopes of early interest-rate cuts, while regulatory approval for exchange-traded funds tracking Bitcoin lifted crypto stocks.

Megacaps including Amazon.com, Tesla, Nvidia and Meta Platforms rose between 0.5% and 1% in premarket trading, with U.S. Treasury yields falling modestly.

The benchmark S&P 500 has recovered nearly 17% from its October lows, gaining steam in December after the Federal Reserve hinted it was reining in inflation and rate cuts were “coming into view”.

The index is a hair’s breadth away from its record closing high of 4796.56, hit in January 2022.

Focus is now on the December Consumer Price Index (CPI) report, due at 8:30 a.m. ET, which could help traders assess the timing of the Fed’s monetary policy easing.

While inflation has edged lower in the face of the central bank’s rapid interest-rate hikes, economists polled by Reuters expect the headline CPI to tick up to 3.2% in December – well above the Fed’s 2% target.

Prices excluding volatile items like food and energy in December are forecast to remain unchanged at 0.3% from the previous month, while year-on-year inflation is expected to slow to 3.8% from November’s 4%.

“Data in line, or ideally softer than expected, will keep the Fed doves in charge of the market,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

“The ongoing tensions in the Red Sea region and the rising cost of moving goods will remain in the back of our minds… but disinflation remains the base case scenario for 2024 due to weakening demand.”

Money markets see a 65% chance the central bank will deliver its first rate cut of at least 25 basis points in March and a 96.5% probability of another reduction in May, despite recent pushback from policymakers.

A separate report at 8:30 a.m. ET is expected to show that the number of Americans filing for unemployment benefits rose to 210,000 in the week ending Jan. 6, from 202,000 a week ago.

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 6% and 9% after the U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track Bitcoin.

At 7:18 a.m. ET, Dow e-minis were down 23 points, or 0.06%, S&P 500 e-minis were up 4.75 points, or 0.10%, and Nasdaq 100 e-minis were up 58.5 points, or 0.35%.

Citigroup declined 1.5% 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 1.2% after Goldman Sachs downgraded the ride-hailing platform’s stock to “neutral” from “buy”.

Netflix rose 2% on a report that its ad-supported tier has reached more than 23 million active users per month globally.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Pooja Desai)

By Elizabeth Howcroft and Alun John

SINGAPORE/LONDON (Reuters) -Bitcoin held near 21-month highs on Thursday after U.S. regulators approved a spot bitcoin exchange traded fund (ETF), while the second-biggest cryptocurrency ether gained on hopes that ETFs tracking it could be the next to win approval.

The Securities and Exchange Commission (SEC) said on Wednesday it approved 11 applications for spot bitcoin ETFs including from BlackRock, Ark Investments/21Shares, Fidelity, Invesco and VanEck.

Most of the ETFs are expected to begin trading on Thursday, and the iShares bitcoin ETF drew strong demand in premarket trading, with volumes surpassing even those of Apple, the world’s most valuable company.

Bitcoin was last trading around $47,133 up 2.6% on the day, heading back towards Tuesday’s 21-month high just below $48,000, which was hit in anticipation of the approval.

It more than doubled in price last year, partially recovering after a turbulent 2022 for the crypto industry when several major companies collapsed, most notably trading venue FTX.

Meanwhile ether, the token that underpins the Ethereum blockchain network, rose 5% to $2,653.8, its highest since May 2022.

“The market’s now quickly moving on to ETH, saying if bitcoin is done, then it’s now very highly likely that the ETH one will get done as well,” said Geoff Kendrick, head of digital asset research at Standard Chartered.

Several firms have filed applications for spot Ethereum ETFs, including BlackRock in November 2023.

Industry participants say U.S.-listed spot crypto ETFs drive greater demand for the underlying digital tokens.

Retail and institutional investors “no longer need to rely on futures trading or self custody to have exposure to bitcoin, and can use a traditional brokerage account,” said Nick Ruck, COO of ContentFi Labs, a blockchain firm focused on IP licensing.

MORE BITCOIN BUYING?

Spot bitcoin ETFs were already available in other markets including in Canada and Europe. JPMorgan analysts said last year that those products had failed to attract large investor interest and that they did not expect the U.S. product to be a gamechanger for crypto.

Marion Laboure, senior strategist at Deutsche Bank Research, said that a spot bitcoin ETF “simply provides standardised access to the digital asset as an investment, without altering bitcoin’s core proposition.”

“Only time will tell if greater adoption will lead to more transformational outcomes for the crypto ecosystem and financial system. For now, the ETF approval opens a new chapter for bitcoin prices, though volatile conditions are likely to persist,” she added.

UBS analysts said in a note on Wednesday that they remain “unconvinced of the structural case for the industry” and that they hadn’t seen a meaningful increase in inquiries about crypto in recent months.

There are also concerns that more traditional institutional money invested in crypto would leave mainstream finance vulnerable to future crypto collapses.

The head of the International Monetary Fund said in December that high adoption of crypto assets could undermine macro-financial stability.

(Reporting by Elizabeth Howcroft in London, Rae Wee in Singapore, and Jason Xue in Shanghai; writing by Alun John ; Editing by Jacqueline Wong and Jane Merriman, Kirsten Donovan)