US equities ended Thursday’s session fairly flat, recovering from initial losses after a new estimate on December inflation came in somewhat higher than expected, casting doubt on the Federal Reserve’s future interest rate policy.
The S&P 500 (GSPC), which had seen a 0.8% decline during the session, ended the day just below the flat line. Both the Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) were just over breakeven.
This week has been difficult for stocks as investors awaited the US consumer inflation report for December. The report indicated a little larger increase than anticipated, with prices rising by 0.3% on a monthly basis and 3.4% on an annual basis. The volatile food and energy categories are removed from the “core” foundation, which shows a 3.9% increase in inflation over the previous year.
For speculators, who have been pricing in the possibility of a “soft landing”—where inflation drops below 2% without causing an economic downturn—since the last CPI data, the print was viewed as crucial.
Meanwhile, after regulatory permission from the SEC on Wednesday, US spot bitcoin ETFs (full list here) started trading on Thursday.
US equities regained their losses on Thursday, closing the day even, following the release of a revised reading on December inflation that was somewhat hotter than anticipated and created further uncertainty over the Federal Reserve’s future interest rate policy.
The previous session saw the S&P 500 (^GSPC) edge closer to a new high, but it ended the day only 3 points down. The Nasdaq (^IXIC) ended the day unchanged, while the Dow Jones Industrial Average (^DJI) increased by 15 points.
Real estate and utilities, two industries that are sensitive to interest rates, underperformed on Thursday. Technology began to encroach on green space. Energy equities closed somewhat higher as well.
After the auto rental business announced that it has begun selling around 20,000 electric vehicles, or roughly one-third of its fleet of EVs, Hertz (HTZ) shares saw a 4% decline on Thursday.
The sale’s proceeds will be used to buy gas-powered cars “to meet customer demand.”
The corporation stated that maintenance expenses are a contributing factor in its decision to move away from EVs.
The previous quarter’s “expenses related to collision and damage, primarily associated with EVs,” according to Hertz, “remained high”.
Hertz also stated that it anticipates depreciation costs related to the EV sales to total around $245 million in the fourth quarter of 2023.
On Thursday, oil futures ended the day at a high.
After rising more than 3%, West Texas Intermediate (CL=F) ended the day up almost 1% at $72.02 per barrel. Futures for Brent (BZ=F) reversed most of their early gains and ended the day marginally higher at $77.04 per barrel.
Thursday saw a sharp increase in prices as Iran claimed to have captured a ship carrying Iraqi oil in retribution for the US seizing the same vessel the previous year. Fears of Middle East hostilities rising were heightened by the occurrence.
In the meanwhile, US petrol and energy prices increased somewhat last month, which helped to create a hotter-than-expected inflation figure for December.
The Bureau of Labour Statistics (BLS) released a statement that stated, “The energy index rose 0.4% over the month as increases in the petrol and electricity index more than offset a decrease in the natural gas index.”
Prices for electricity increased 1.3% over the previous month. After falling by 6% in November, the petrol index rose by 0.2% in December. But the BLS pointed out that last month’s petrol prices actually decreased by 5.8% prior to a seasonal adjustment.
The higher-than-expected inflation figure from last month was mostly influenced once more by housing expenses. However, as Dani Romero of Yahoo Finance points out, some analysts see encouraging trends in the most recent statistics.
December saw a 0.5% monthly increase in the shelter component of the Consumer Price Index (CPI), up from November’s 0.4% monthly gain.
Shelter inflation increased 6.2% in the previous year, maintaining a high level year over year.
The sanguine opinion? This is less than the peak of 8.2% in March and the 6.5% year-over-year number in November.