Wall St eyes flat open as inflation data dampens rate

By Johann M Cherian and Huainan foreign exchange collapseAnkika Biswas

(Reuters) - Wall Street's main indexes were set to open muted on Thursday after a hotter-than-expected inflation report dampened hopes of early interest-rate cuts, while regulatory approval for exchange-traded funds tracking spot bitcoin lifted crypto stocks.

A U.S. Labor Department report showed the Consumer Price Index (CPI) rose by 3.4% in December on an annual basis, higher than the 3.2% climb expected by economists polled by Reuters.

Prices excluding volatile items like food and energy rose 3.9% in December year-on-year, compared with expectations of a 3.8% advance.

"What this data really shows is that the path to a soft landing is not a straight line. The hotter-than-expected inflation number means investors have to rethink how many rate cuts the Fed will be able to pull off in 2024, and when," said Brian Jacobsen, chief economist at Annex Wealth Management.

Futures contracts that settle to the Fed's target for the overnight lending rate between banks fell after the data. Market participants now imply about a 60% chance of a March rate cut, versus the 70% chance seen before the data.

A separate report showed the number of Americans filing for unemployment benefits stood at 202,000 in the week ending Jan. 6, compared with expectations of 210,000.

The yield on the benchmark ticked up to over 4%, pressuring megacap stocks in premarket trading. [US/]

Amazon.com (NASDAQ:), Microsoft (NASDAQ:) and Nvidia (NASDAQ:) pared gains and were up between 0.5% and 0.8%.

The benchmark has recovered nearly 17% from its October lows, gathering steam in December after the Federal Reserve hinted it was reining in inflation and rate cuts were "coming into view".

Investors will also parse remarks by Richmond Fed President Thomas Barkin, a voting member this year, later in the day.

Crypto stocks like Coinbase (NASDAQ:) Bitfarms and Riot Platforms (NASDAQ:) advanced between 3.8% and 7.3% after the U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track bitcoin.

At 8:47 a.m. ET, were down 41 points, or 0.11%, were down 4.5 points, or 0.09%, and were up 1.5 points, or 0.01%.

Citigroup declined 1.1% after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, to be reported on Friday.

Other banks like JPMorgan Chase (NYSE:), Bank of America and Wells Fargo are also set to report on Friday.

(NASDAQ:) lost 1.5% after Goldman Sachs downgraded the ride-hailing platform's stock to "neutral" from "buy".

Netflix (NASDAQ:) rose 2.0% on a report that its ad-supported tier has reached more than 23 million active users per month globally.

Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!