Global stock indexes were lower on Thursday, with the S&P 500 down after briefly rising above its record closing high, while the dollar hit a one-month high against the yen as investors digested data showing that U.S. consumer price inflation came in above economists’ expectations in December.
Investors also were focused on crypto markets after U.S. regulators late on Wednesday approved the first U.S.-listed exchange-traded funds to track bitcoin, a big step for the cryptocurrency world. Several ETFs tied to the spot price of bitcoin began trading in the U.S. on Thursday.
The day’s data showed 6headline CPI rose 0.3% last month, for an annual gain of 3.4%. That was expected to be 0.2% and 3.2%, respectively.
The consumer price index data raised some doubts that the Federal Reserve will cut rates as soon as some traders expect.
The odds of a March rate reduction from the Fed fell to 65% from 67% on Wednesday, according to the CME Group’s FedWatch Tool.
Some investors said the data does not mean there’s a resurgence in inflation.
“This is not pernicious, it’s not a bad number… This is not a signal of a resurgence of inflation. All it’s saying is that inflation has come down,” said Thierry Wizman, global FX and interest rate strategists in Macquarie, New York.
“So, bottom line, this is not dangerous, the Fed will still be easing. It may not start in May or June, but it will happen.”
The Dow Jones Industrial Average fell 194.5 points, or 0.52%, to 37,501.23, the S&P 500 lost 20.06 points, or 0.42%, to 4,763.39 and the Nasdaq Composite dropped 62.48 points, or 0.42%, to 14,907.17.
The benchmark S&P 500 briefly surpassed its record closing high of 4,796.56, hit in January 2022, before erasing the opening gains.
Also, 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.
The pan-European STOXX 600 index lost 0.50% and MSCI’s gauge of stocks across the globe shed 0.29%.
The dollar index was last up 0.08% on the day at 102.42. It had traded at around 102.20 before the data was released.
The euro dipped 0.06% on the day to $1.09630. The greenback gained 0.13% to 145.97 yen, after earlier reaching 146.10, the highest since Dec. 11.
U.S. Treasury yields were mixed in volatile trading, in the wake of the U.S. inflation data, with those on the long end trading slightly higher. The benchmark 10-year yield was last up 1.3 basis points (bps) at 4.043%.
BITCOIN BOOST
Crypto stocks like Coinbase were down on Thursday, while bitcoin last rose 2.7% to $47,208.
Though long expected, the green light by the SEC marks a watershed moment for the world’s best known cryptocurrency.
Standard Chartered’s head of digital assets research Geoff Kendrick has estimated the approval, along with bitcoin’s ‘halving’ in April, which cuts the currency’s supply and historically kick-starts price rises, could send it to $100,000 by the end of the year.
“If ETF-related inflows materialize as we expect, we think an end-2025 level closer to $200,000 is possible,” he said, assuming that between $50 billion and $100 billion would flood into the new U.S. ETFs by the end of the year.
Investor focus will soon turn to U.S. earnings season, with banking giants JPMorgan Chase, Bank of America, Citigroup and Wells Fargo all due to report earnings on Friday.
