US stocks are booming as inflation rises more than expected

U.S. stocks rose Thursday morning despite a new reading of December inflation coming in slightly higher than economists had expected, raising new questions about the Federal Reserve's interest rate path.

The S&P 500 (^GSPC) gained about 0.2% after the benchmark ended Wednesday at its highest close since January 2022, narrowly reaching a new record. The Dow Jones Industrial Average (^DJI) gained 0.1%, while the tech-heavy Nasdaq led the way with a gain of 0.3%.

Stocks struggled this week as investors counted down to December's U.S. consumer inflation. This reading showed a slightly larger increase than expected as prices rose 0.3% month-on-month and 3.4% year-on-year. On a “core” basis that excludes the volatile food and energy categories, inflation rose 3.9% last year.

The pressure was seen as critical for traders, who have increasingly priced in the likelihood of a “soft landing” – where inflation falls to 2% without causing an economic downturn – since the last CPI report.

Meanwhile, crypto stocks got a boost after the SEC gave regulatory approval for U.S. spot Bitcoin ETFs to begin trading on Thursday, in what is seen as a game-changer for the sector. Shares of exchange Coinbase (COIN) and miner Marathon Digital (MARA) rose in premarket trading.

Bitcoin (BTC-USD) climbed above $47,000 to trade at its highest level since March 2022, while rival Ether (ETH-USD) jumped amid bets the second-largest token will be next to get the ETF greenlight .

Ahead of Friday's quarterly financial update, Citigroup (C) said it would record more than $3 billion in one-time reserves and expenses in its results. Fourth-quarter earnings season is crucial for stocks given their dismal performance so far this year.

live1 update

• Thu, Jan 11, 2024 at 7:47am CST
  

  Inflation is higher than expected in December

  Thursday's highly anticipated inflation report showed consumer prices rose slightly more than expected in November.

  A quick look at the numbers:

  • Overall CPI, month over month: 0.3% increase vs. expected 0.2%

  • Overall CPI YoY: 3.4% vs expected 3.2%

  • “Core” CPI YoY: 3.9% vs. 3.8% expected

  Yahoo Finance's Josh Schafer has all the details here.

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