December Inflation Surpasses Expectations, Raises Questions on Fed’s Interest Rate Strategy

New York City, NY – US stock futures experienced volatility on Thursday morning as December’s inflation data came in slightly higher than expected. The report has raised questions about the Federal Reserve’s plans for interest rates.

S&P 500 futures were down around 0.1% after the benchmark index reached its highest close since January 2022 in the previous session. Dow Jones Industrial Average futures were mostly unchanged, while Nasdaq 100 futures also declined slightly.

Investors have been closely monitoring the US consumer inflation reading for December. The latest data showed a 0.3% increase in prices compared to the previous month, and a 3.4% year-over-year rise. On a “core” basis, which excludes volatile food and energy prices, inflation rose 3.9% over the past year.

Traders regarded this inflation report as critical, as it could impact the likelihood of a “soft landing” scenario, where inflation decreases to 2% without an economic downturn. The Federal Reserve has been navigating this delicate balance since the last Consumer Price Index (CPI) report.

In the cryptocurrency market, stocks received a boost after the Securities and Exchange Commission (SEC) granted regulatory approval for US spot bitcoin exchange-traded funds (ETFs) to begin trading. This move is seen as a game-changer for the industry, leading to growth in shares of Coinbase and Marathon Digital in premarket trading.

Bitcoin climbed above $47,000, reaching its highest levels since March 2022, while ether also jumped amidst expectations of the token receiving ETF approval.

Looking ahead, Citigroup is set to release its quarterly financial update on Friday, revealing that it will take over $3 billion in one-time reserves and expenses. The fourth-quarter earnings season is crucial for stocks, given their lackluster performance so far this year.

To conclude, December’s inflation data came in higher than expected, leaving investors uncertain about the Federal Reserve’s interest rate plans. While cryptocurrency stocks received a boost from the SEC’s approval of bitcoin ETFs, Citigroup’s upcoming financial update highlights the importance of the current earnings season for stock performance.

Note: The information in this article is based on analysis and does not reflect the views of any news organization.