Major Averages Fall After Inflation Rebounded, SEC Approves Bitcoin ETFs

Barry Adams
11 Jan, 2024
New York City

Stocks were in a holding pattern in early trading, and investors reacted to the release of closely watched consumer price inflation later today.

The S&P 500 index and the Nasdaq Composite traded in a tight range in early trading, and bank stocks were in focus ahead of the release of quarterly results on Friday.

In overseas trading in Europe, market indexes rebounded but lacked momentum amid a weak economic growth outlook and interest rate uncertainties.

In the year so far, market indexes in Frankfurt, Paris, and London have fallen between 1% and 2%.

In Asia, the Nikkei index traded at a new 34-year high after the yen declined to 145 against the dollar and in the hopes that the Bank of Japan would continue its ultra-loose monetary policy.

The Bank of Korea held its key interest rate for the eighth time in a row at 3.5%.

 

Consumer Price Inflation Accelerated In December 

The consumer price index advanced to 3.4% in December, from a five-month low of 3.1% in November, the U.S. Bureau of Labor Statistics reported Thursday. 

Over half of the increase in inflation was driven by a rise in shelter prices, and the index for shelter rose at 6.2% compared to 6.5% in the previous month.  

The slower decline in energy prices by 2.0% compared to 5.4% fall in November, supported the rebound in inflation in the month. 

Compared to November, consumer prices rose 0.3%, the largest increase in three months. 

Annual core inflation, which excludes food and energy, eased to 3.9% in December from 4.0% in November, and monthly core inflation rose 0.3% in the month, matching the rate in the previous month. 

The shelter inflation was the largest contributor to core inflation in the month, after prices rose at 0.5% in December, faster than 0.4% rise in the previous month.   

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.1% to 4,776.81, and the Nasdaq Composite declined 0.1% to 14,731.08.

The yield on 2-year Treasury notes decreased to 4.34%. 10-year Treasury notes edged down to 3.98%, and 30-year Treasury bonds eased to 4.16%.

WTI crude oil increased $1.46 to $72.77 a barrel, and natural gas prices decreased 7 cents to $2.96 a thermal unit.

Gold increased $9.80 to $2,033.21 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.27.

 

U.S. Stock Movers

KB Home declined 3% to $61.28 after the home builder reported its fourth-quarter results.

Revenue in the quarter decreased to $1.67 billion from $1.94 billion, net income dropped to $150.3 million from $216.4 million, and diluted earnings per share fell to $1.85 from $2.47.

Homes delivered in the quarter decreased 10% to 3,407, and the average selling price declined 4.5% to $487,300 from $510,400 a year ago.

However, demand for new homes increased in the final quarter, and the cancellation rate declined.

Net orders for the fourth quarter were up 176% to 1,909, and net order value grew 157% to $932.6 million.

However, the backlog of home orders declined to 5,510 from 7,662, and the backlog value fell to $2.67 billion from $3.69 billion a year ago.

Bitcoin-focused stocks traded higher after the SEC approved the launch of spot bitcoin-focused ETFs.

Robinhood Markets rose 4.4% to $12.63, Marathon Digital Holdings gained 6.6% to $27.30, and MicroStrategy jumped 4.9% to $593.20.