Stocks ease, yields inch up ahead of US inflation data, earnings

All three indexes opened way down but at least the S&P and Nasdaq managed to recover to close the session at near break-even. The Dow was not so lucky having lost over 300 right out the gate and recovering only half before close. Just as yesterday Treasury yields fell and stocks rose ahead of inflation optimism over the CPI and PPI coming soon, today those same bets were hedged and yields rose and stocks fell as the Treasury sold $52B in 3-year notes. 

With Q4 reporting starting Friday, today’s expert writes this off as “pre-earnings jitters, with valuations being quite rich, you need earnings growth to support these valuations.” The odds of a March cut are now at 65.8% and the CPI report due Thursday is expected to show inflation at 3.2% annual. Per the CBOE, volume came in at 10.7 billion. 

Stocks ease, yields inch up ahead of US inflation data, earnings

By Caroline Valetkevitch

Tue January 9, 2024 5:58 PM

DJ: 37,683.01  +216.90        NAS: 14,843.77  +319.69        S&P: 4,763.54  +66.30     1/8

DJ: 37,525.16  -157.85         NAS: 14,857.71  +13.94          S&P: 4,756.50  -7.04        1/9

NEW YORK, Jan 9 (Reuters) - Global stock indexes mostly dipped and Treasury yields edged higher on Tuesday, with investors bracing for key U.S. inflation data this week and the start of fourth-quarter company earnings.  Bitcoin rose, then fell, on confusion late on Tuesday afternoon over whether the U.S. Securities and Exchange Commission had approved spot bitcoin exchange-traded funds. An SEC spokesman said the SEC has not approved spot bitcoin ETFs and that a post on its social medial platform X was incorrect.

All eyes will be on the U.S. consumer prices report for December, due on Thursday. It is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis. (USCPI=ECI), (USCPNY=ECI) Investors are looking for clues on when the Federal Reserve may begin cutting interest rates. Expectations the U.S. central bank could begin cutting rates as soon as March have decreased, with CME's FedWatch Tool showing a 65.7% chance for a cut of at least 25 basis points (bps) for the month, down from 79% a week ago. 

Ahead of the U.S. earnings season kicking off on Friday, shares in some major U.S. banks fell around 1%.  "This is pre-earnings jitters, with valuations being quite rich, and you needing earnings growth to support these valuations," said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.

The Dow Jones Industrial Average (.DJI) fell 157.85 points, or 0.42%, to 37,525.16, the (.SPX) lost 7.04 points, or 0.15%, to 4,756.50 and the (.IXIC) gained 13.94 points, or 0.09%, to 14,857.71.

The S&P 500 rose 24% in 2023.

Boeing (BA.N) shares fell 1.4%. The U.S. National Transportation Safety Board said late on Monday it could not yet tell whether a recovered cabin panel that blew off an Alaska Airlines (ALK.N) Boeing 737 MAX 9 plane during a flight last week had been properly attached.  The MSCI world equity index (.MIWD00000PUS), which tracks shares in 49 nations, lost 0.23%, while European stocks (.STOXX) ended down 0.2%.  Euro area unemployment data released on Tuesday came in below expectations. 

U.S. Treasury yields were marginally higher. The U.S. Treasury sold $52 billion in three-year notes, picking up a high yield of 4.105%, lower than the market expected at the bid deadline, suggesting investors absorbed the note without a premium.  In afternoon trading, the benchmark 10-year yield was slightly up at 4.017% .

The dollar rose 0.17% against the yen to 144.46 . The euro was down 0.2% on the day at $1.0928, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was up 0.2% at 102.51.  The dollar index hit a five-month low in December, with investors betting the Fed would cut rates sooner rather than later.  Oil prices climbed around 2% amid ongoing worries over the Middle East crisis. Brent crude futures settled $1.47, or 1.9%, higher at $77.59 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.47, or 2.1%, higher at $72.24. 

Per the CBOE, volume came in at 10.7 billion.