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Leadership came from the usual suspects as the tightly knit Magnificent Seven (or maybe the Super Six as Tesla (TSLA)did not participate) pushed Consumer Discretionary (0.80%), Technology (0.85%), and Communication Services (0.93%) higher. Industrials follow a distant fourth gaining 0.51% and Energy was yesterday’s laggard, giving back 0.98%. Overall, broad indexes were higher as the Russell 2000 gained 0.11%, the Dow rose 0.45%, the S&P 500 added 0.57% and the Nasdaq Composite closed 0.75% higher.
Bitcoin ETFs Debut
If readers have ever wondered about Bitcoin and how they could get exposure to it, today marks the first time that US investors can access Bitcoin directly in the form of an ETF. While it took the SEC over a decade to issue a final approval (which they did for real yesterday) there are now up to 11 funds set to start trading today across all exchanges including:
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BlackRock's spot bitcoin ETF, the iShares Bitcoin Trust (IBIT)
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WisdomTree announces the launch of the WisdomTree Bitcoin Fund (BTCW)
- Invesco announced the launch of the Invesco Galaxy Bitcoin ETF (BTCO)
Up Next: The December CPI Report
US equity futures are pointing to a positive open. However, what the December Consumer Price Index (CPI) brings at 8:30 AM ET could alter those futures. The market is caught between Fed funds futures traders expecting six rate cuts this year while the central bank has signaled potentially three cuts after more cautious comments from Fed officials suggesting any cuts may not materialize until 2H 2024. This has many looking to this morning’s December CPI report, which is expected to show a tick-up for its headline figure, for clarity on which path is the likely one.
The December CPI headline figure is forecasted to rise to +3.2% YoY, up from +3.1% the prior month. The crux of the report will once again be the core-CPI reading for December, which is expected to slow to +3.8% YoY from +4.0% the month before, but even such a print suggests a long path to the Fed’s 2% target and the Fed’s first rate cut.
Heading into the report, a dramatically lower-than-expected core CPI figure would be welcomed by the stock market. But a figure that meets or is above the consensus forecast would be the latest data point arguing against the market’s expectation for rate cuts to begin this March and foster a recalibration of those expectations. Re-thinks such as that tend to bring volatility back into the market, something we could also see as the December quarter earnings season moves up a gear early next week.
Related: In A Holding Pattern Ahead of the December CPI Report