Wall Street Slips As Rate-Cut Hopes Diminish With Inflation, Bitcoin Remains Unmoved By ETF Debut: What's Driving Markets Thursday?

Author: Piero Cingari | January 11, 2024 03:10pm

It’s a bearish Thursday on Wall Street, with stocks relinquishing their gains due to unexpectedly high inflation numbers for December, causing some turbulence in market expectations regarding earlier Federal Reserve rate cuts.

During the previous month, the Consumer Price Index (CPI) surged by 3.4% compared to the previous year, surpassing the forecasted 3.2% increase. Core inflation stood at 3.9% annually, exceeding the expected 3.8%, primarily driven by the persistent high costs of shelter.

Latest Fed remarks had a chilling effect on the markets. Richmond Fed President Thomas Barkin indicated his willingness to consider rate reductions once inflation is on track to reach 2%, while Cleveland Fed President Loretta Mester expressed the view that March might be too early for a rate cut.

In response, traders adjusted their expectations for interest rates, with the implied probability of a March rate cut falling from 70% to around 63%, while maintaining their overall bet of six rate cuts throughout 2024.

Meanwhile, Treasury yields remained relatively stable, while the U.S. dollar strengthened by 0.2%.

Bitcoin (CRYPTO: BTC) experienced a 0.7% decline on the day of the Bitcoin ETFs’ trading launch. In the precious metals market, the SPDR Gold Trust (NYSE:GLD) saw a 0.4% drop in gold prices, while silver prices plummeted by 1.5%.

On the energy front, crude WTI, monitored through the United States Oil Fund (NYSE:USO), rose by 1% to $72 a barrel amid escalating tensions between Iran and the U.S. in the Red Sea region.

In the tech realm, Microsoft Corp. (NYSE:MSFT) made headlines, after overcoming rival Apple Inc. (NASDAQ:AAPL) as the world’s most valuable company in terms of market capitalization.

Thursday's Performance In US Major Indices, ETFs

Index	Price	Percentage Change
Nasdaq 100	16,746.89	-0.3%
Dow Jones	37,575.52	-0.3%
S&P 500	4,764.38	-0.4%
Russell 2000	1,948.21	-1.1%

The SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.4% to $474.88, the SPDR Dow Jones Industrial Average (NYSE:DIA) inched 0.2% down to $376.03 and the tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) was down 0.2% to $407.69, according to Benzinga Pro data.

Sector-wise, the Energy Select Sector SPDR Fund (NYSE:XLE) was the only one trading in the green, up 0.3%. Utilities sharply underperformed, with the Utilities Select Sector SPDR Fund (NYSE:XLU) down 2.3%.

On an industry level, the VanEck Oil Services ETF (NYSE:OIH) outperformed, up 0.4%. Regional banks, as tracked by the SPDR Regional Banking ETF (NYSE:KRE), fell 2.3%

Thursday's Stock Movers

Paramount Global (NASDAQ:PARA) fell nearly 6%, after Redburn downgraded the entertainment company’s stock from Neutral to Sell, with a price target of $11.
Warner Bros Discovery Inc. (NASDAQ:WBD) fell 4.5%, on a similar Redburn’s decision.
Netflix Inc. (NASDAQ:NFLX) rose 2.7%, after the streaming giant announced it surpassed 23 million active users globally for its ad-based plan.
Crypto-related companies Coinbase Global Inc. (NASDAQ:COIN), Riot Platforms Inc. (NASDAQ:RIOT) and Marathon Digital Holdings Inc. (NASDAQ:MARA) sold off heavily, down 6.6%, 16% and 14% respectively, on a subdued Bitcoin reaction to the ETF approval.
Net Lease Office Properties (NYSE:NLOP) rose 10.3% after the company announced sales of four U.S. office properties totaling $43 million and renegotiated a loan with JP Morgan.