A person wearing a protective mask walks in front of an electronic stock board showing Japan’s Nikkei 225 index at a securities firm Thursday, Jan. 12, 2023, in Tokyo. Asian shares were mixed Thursday ahead of a closely watched report on US inflation viewed as a good indicator of whether Wall Street’s recent rising optimism is warranted or overdone. (AP Photo/Eugene Hoshiko)
NEW YORK (AP) — Wall Street is opening relatively steadily, holding onto most of the gains built recently on hopes that cooling inflation will get the Federal Reserve to take it easier on the economy and markets through smaller hikes to interest rates. The S&P 500 gave up an early gain and was 0.1% lower Thursday after a highly anticipated government report showed inflation slowed in December to its least debilitating level in more than a year. The Nasdaq slipped 0.2% and the Dow fell 0.1%. Treasury yields fell further as traders downshifted bets for how big the Fed’s next rate increase will be.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
US markets are in a holding pattern early Thursday ahead of the highly-anticipated release of an inflation report that could influence monetary policy decisions being made by the Federal Reserve.
Futures for the Dow Jones industrials and benchmark S&P rose just 0.1% before the opening bell.
“All eyes are on the arrival of US inflation data this week,” Clifford Bennett, chief economist at ACY Securities, said in a report.
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Economists expect Thursday’s consumer price index to show inflation cooled last month to 6.5%, down from 7.1% in November and well below a June peak of 9%. It is hoped that the downward trend in prices will prompt the Fed to ease off a blistering pace of rate increases to tame inflation.
Yet there has been no signal from the Fed or any of its voting members that that will happen, despite pockets of weakness that have begun to appear in the wake of its aggressive monetary policy.
The Fed has said repeatedly it plans to raise its key overnight interest rate further, past its current perch sitting in a range of 4.25% to 4.50%. At the start of 2022, rates were essentially zero.
Stocks began 2023 with gains driven by hopes that cooling inflation and a slowing economy may lead the Federal Reserve to ease off its steep interest rate hikes. Such increases can help stamp out high inflation, but they also slow the economy and raise the risk of a recession while hurting prices for stocks and other investments.
In addition to the Fed focus, this week marks the start of the earnings season and a look at how major US corporations closed out 2022. Bank of America, Delta Air Lines, JPMorgan Chase and UnitedHealth will release quarterly performance figures Friday.
In Europe at midday, France’s CAC 40 rose 0.9%, while Germany’s DAX and Britain’s FTSE 100 each rose 0.8%.
In Asian trading, Japan’s benchmark Nikkei 225 wobbled finished little changed at 26,449.82, up less than 0.1%. Australia’s S&P/ASX 200 jumped 1.2% to 7,280.40. South Korea’s Kospi gained 0.2% to 2,365.10. Hong Kong’s Hang Seng rose 0.4% to 21,514.10, recouping earlier losses, while the Shanghai Composite rose less than 0.1% to 3,163.45.
Japan’s Finance Ministry reported the country’s current account returned to the black in November for the first time in two months, reflecting a slimming of the trade deficit as the yen regained value against the US dollar and other currencies.
In energy trading, benchmark US crude gained $1.02 to $78.43 a barrel. It jumped $2.29 to 77.41 on Wednesday. Brent crude, the international pricing standard, advanced $1.14 to $83.81 a barrel.
In currency trading, the US dollar slipped to 130.68 Japanese yen from 132.44 yen. The euro cost $1.0762, inch up from $1.0757.
On Wall Street on Wednesday, the S&P 500 climbed 1.3% and the Dow industrials rose 0.8%. The Nasdaq composite gained 1.8%.
Kageyama reported from Tokyo; Ott reported from Washington.