A customer shops for milk at a grocery store on December 12, 2023 in San Anselmo, California.
Justin Sullivan | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Price pressures persist
An inflation report for December showed U.S. consumer prices increased more than expected. CPI rose 0.3% in December, according to the Labor Department data, slightly more than expectations of a 0.2% rise. On an annual basis, CPI was up 3.4% year on year, also above a 3.2% rise predicted by economists polled by Dow Jones. The increase in prices was mainly driven by higher shelter costs.
Flat stocks
U.S. stocks ended Thursday right around the flatline as the slightly hotter-than-expected inflation data kept any big moves at bay. Stocks in Asia fell as China’s annual exports dropped, but Japan’s Nikkei 225 bucked the trend to extend its record rally.
Big China export drop
Data from China showed annual exports falling for the first time in seven years in 2023. The country, however, saw higher-than-expected shipments in December. China exports fell 4.6% last year, its first annual drop since 2016, as demand for China made goods weakened amid a global economic slowdown.
Bitcoin ETFs go!
Bitcoin exchange traded fund made its debut on U.S. exchanges on Thursday, tracking wild swings in the prices of the volatile cryptocurrency. There were about 11 ETFs that began trading after the U.S. Securities and Exchange Commission approved the recent rule change, including the Grayscale Bitcoin Trust and the iShares Bitcoin Trust which saw tens millions of shares exchange hands.
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The bottom line
Thursday was a historic day for cryptocurrencies but the broader theme for markets was the slightly hotter-than-expected inflation reading.
Wall Street’s major indexes ended flat, with the Nasdaq Composite settling at 14,970.19, the Dow Jones Industrial Average eking out a 0.04% gain and the S&P 500 inching 0.07% lower.
Following the the 3.4% annual rise, the road to the U.S. Federal Reserve’s 2% inflation target could be steeper than what many market participants and economists expected.
It also shines the light on the gap between the Fed’s communique and market expectations for rate cuts, which are seen as early as March this year according to the CME FedWatch tool.
“The ‘higher for longer’ party has received one more bullet in its banderole,” said Giuseppe Sette, president of AI-based market research firm Toggle AI said.
“For the entire history of the Fed, rates have always been kept considerably above inflation in any scenario short of a recession. This CPI print pushes the first rate cut further away, possibly not even in 2024.”
But bitcoin ETF trading quickly became an event that would give market players a reason to be excited about.
This allowed regular investors to get a slice of the cryptocurrency pie and spurred hopes that bigger Wall Street institutional traders may also jump into the boat.
Bitcoin, the world’s oldest and most popular cryptocurrency, had a volatile session on Thursday. The cryptocurrency jumped above $49,000, hitting its highest since December 2021 but that rally fizzled out by the end of the day.
Bitcoin ETF also mirrored the choppy moves in the cryptocurrency.
