Stocks Post Gains Following Tame Inflation Report…..
U.S. equities finished higher in the wake of a consumer prices report that showed inflation cooled last month. However, the gains were tempered, as the core rate, which strips out food and energy costs, rose on a monthly basis. Treasury yields were noticeably lower, along with the U.S. dollar, while crude oil prices rose, and gold rallied to extend a recent run. Employment figures were also in focus, with jobless claims dipping slightly and coming in better than expected. News on the equity front surrounded some ancillary corporate results ahead of the start to Q4 earnings season tomorrow, as American Airlines boosted its Q4 guidance, but KB Home missed quarterly expectations. Asian stocks finished mostly higher, and markets in Europe continued its strong start to 2023 with the U.S. inflation data in focus.
The Dow Jones Industrial Average rose 217 points (0.6%) to 34,190, the S&P 500 Index gained 14 points (0.3%) to 3,983, and the Nasdaq Composite increased 69 points (0.6%) to 11,001. In moderate volume, 4.3 billion shares of NYSE-listed stocks were traded, and 5.6 billion shares changed hands on the Nasdaq. WTI crude oil added $0.98 to $78.39 per barrel.
December consumer price inflation in line with forecasts, jobless claims dip…..
The Consumer Price Index (CPI) ticked 0.1% lower month-over-month (m/m) in December, matching the Bloomberg consensus estimate, and versus November’s unrevised 0.1% increase. The core rate, which strips out food and energy, rose 0.3% m/m, in line with expectations and versus November’s unadjusted 0.2% rise. Compared to last year, prices were 6.5% higher for the headline rate, matching estimates and from the prior month’s unrevised 7.1% rise. The core rate was up 5.7% y/y, in line with projections, and versus November’s unadjusted 6.0% rise.
Weekly initial jobless claims came in at a level of 205,000 for the week ended January 7, below estimates of 215,000 and compared to the prior week’s upwardly revised 206,000 level. The four-week moving average decreased by 1,750 to 212,500, and continuing claims for the week ended December 31 fell by 63,000 to 1,634,000, south of estimates calling for 1,710,000. The four-week moving average of continuing claims declined by 8,750 to 1,679,500.
Treasury rates were noticeably lower following the inflation and employment data, as the yield on the 2-year note was down 11 bps to 4.12%, while the yields on the 10-year note and the 30-year bond fell 12 bps to 3.43% and 3.56%, respectively.
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