Consumers shop for groceries at a retail chain store in Rosemead, California, on December 12, 2023.
Frederic J. Brown | AFP | Getty Images
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What you need to know today
Price pressures persist
An inflation report for December showed 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. Europe’s Stoxx 600 ended lower for the third straight day, with shares of Marks & Spencer falling to the bottom of the index after the British retailer flagged “near-term” challenges.
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.
Tech layoffs
Investors on Thursday also witnessed a series of layoffs across technology companies. In a bet to focus on its “biggest product priorities,” Google parent Alphabet laid off several hundred employees. Discord, a popular messaging service used by gamers, also confirmed it will be slashing 17% of its workforce that tallies to about 170 jobs, while Amazon’s Audible division said it will cut about 5% of its broader workforce.
[PRO] Impact of the new bitcoin ETF
Analysts are already starting to predict what could happen next now that the long-awaited bitcoin ETFs have begun trading on U.S. exchanges. Hopes grow that the move could bring in the likes of old school institutional traders that have been on the sidelines.
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.