US STOCKS Wall St ends up slightly; data suggests that inflation could be on a downward trend

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Consumer prices in the United States fell in December

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Friday: Quarterly results from large banks

(Updates to close).

By Caroline Valetkevitch

NEW YORK (12 January) – U.S. stock closed slightly higher on Thursday after data showing a decrease in consumer prices for December bolstered the expectation of less aggressive Federal Reserve rate hikes.

According to the report, U.S. consumer price fell in December for the first-time in over 2 1/2 years. This suggests that inflation may now be on a sustained downward trajectory.

“Most investors expect inflation to fall. This is a good sign and I expect decent earnings,” Gary Bradshaw, portfolio manager at Hodges Capital Management, Dallas, Texas, said.

Friday brings results from a number of big U.S. banks, kicking off the start of the fourth-quarter earnings season for S&P 500 companies.

CPI data resulted in trading being choppy. The report showed that rents were still very high, while the labor market is tight and inflation remains well above the Fed target.

Separate data was released Thursday showing that weekly jobless claims declined last week.

Some strategists believe that the Fed may be able to lower consumer prices without causing severe growth if there is a slowdown in U.S. Inflation.

Traders’ wagers on a Fed 25-basis rate hike in February were up to 91%, compared with 77% before.

Microsoft shares were providing the biggest boost to the S&P 500, while energy shares also were higher along with oil prices.

According to preliminary data, the S&P 500 gained 13.26 points, or 0.33%, to end at 3,982.87 points, while the Nasdaq Composite gained 69.12 points, or 0.65%, to 11,002.31. The Dow Jones Industrial Average climbed 217.33 points or 0.64% to 34,189.31.

“The (CPI report confirms that inflation has fallen and that it has reversed,” stated Peter Cardillo chief market economist at Spartan Capital Securities, New York.

Patrick Harker of Philadelphia Fed and James Bullard of St. Louis Fed acknowledged the moderated prices but stressed that monetary policy needs to be tightened further to keep inflation at the central bank’s target.

After four consecutive 75-bps increases, the Fed raised its key rate 50 basis points in December.

The profits of large U.S. banks are expected to be lower in the fourth quarter, as lenders hold onto funds to weather an economic slowdown.

Also, overall S&P 500 earnings are expected to have declined year-over-year in the fourth quarter, according to IBES data from Refinitiv, which would be the first quarterly U.S. earnings decline since 2020.

Tesla Inc shares were close to flat after Bloomberg, citing people who are familiar with the matter reported that Tesla had delayed plans to expand its Shanghai plant. (Additional reporting by Shubham Btra, Amruta Khandekar and Ankika Biswas at Bengaluru; Editing by Marguerita Chuy