S&P 500 closes little changed Thursday after hotter-than-anticipated inflation report:

Traders work on the floor of the New York Stock Exchange on Aug. 2, 2023.

Spencer Platt | Getty Images News | Getty Images

Stocks ended Thursday near the flat line after a fresh round of inflation data reflected an uptick in consumer prices for December.

The Nasdaq Composite closed at the flat line, settling at 14,970.19. The Dow Jones Industrial Average eked out a gain of 15.29 points, or 0.04%, to close at 37,711.02. The S&P 500 edged lower by 0.07% to end at 4,780.24. Earlier in the session, the broad market index briefly traded above its record closing high of 4,796.56.

December’s consumer price index report came out slightly higher-than-expected, reflecting a 0.3% increase in consumer prices for the month, pushing the annual rate to 3.4%. Economists polled by Dow Jones had predicted that the CPI rose 0.2% in December and 3.2% on a year-over-year basis.

Core CPI, excluding volatile food and energy prices, came in line with expectations, however, pointing to persistent—yet easing—inflation pressures. The data released on Thursday suggests that future interest rate cuts may be slower to come.

“This uptick in CPI is a critical reminder of the unpredictable nature of economic recovery and the murkiness of the macro-economic data,” said Jon Maier, chief investment officer at Global X. “Markets may need to brace for potential volatility, as the Fed could maintain or potentially intensify its restrictive monetary policy stance in response to these inflationary pressures.”

Yields initially rose on the back of the CPI data, with the rate on the 10-year note reaching a high of 4.068% before slipping to about 3.98%.

Thursday’s market action is, in part, influenced by tempered expectations surrounding the Federal Reserve’s rate cut timeline as well as earnings jitters, according to CFRA chief investment strategist Sam Stovall. This week is kickstarting the fourth-quarter earnings season, with banking behemoths Bank of America, Wells Fargo and JPMorgan Chase set to report results Friday.

“Earnings are adding to investor agita,” Stovall said. “We are in the pre-earnings period where there is a bit of nervousness, because on December 31, earnings were expected to be up 2.1% In the final quarter and are now expected to be up 1.7%.”

According to Carson Group global macro strategist Sonu Varghese, big bank earnings on Friday should reflect a generally strong consumer, which should lend to a rosier picture for the U.S. economy and nominal GDP growth.

Elsewhere in Thursday’s market, bitcoin ETFs rose on their first day of trading as crypto prices also edged up. Bitcoin briefly hit the $49,000 mark earlier Thursday before falling to above $46,000. The moves follow Wednesday’s approved rule changes from the U.S. Securities and Exchange Commission which opened the door for bitcoin exchange-traded funds and expanded investors’ access to the flagship crypto.

Stocks are coming off a winning session, with all three major indexes rising on Wednesday.

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