U.S. stocks edge higher Thursday during midday trading as investors digest fresh inflation data that showed prices increased at a slower annual rate in December, a report that was in step with expectations from economists.
The S&P 500 (^GSPC) added 0.2%, while the Dow Jones Industrial Average (^DJI) rose 0.5%. The technology-heavy Nasdaq Composite (^IXIC) increased about 0.1% during midday trading.
U.S. Treasury yields ticked down. The yield on the benchmark 10-year U.S. Treasury note fell to three.4% from the three.5% Thursday morning. The dollar index fell 0.51% to $102.66.
The moves got here after data from the Bureau of Labor Statistics showed prices in December decreased 0.1% over the prior month but increased 6.5% over the prior yr. That was in step with expectations, as year-over-year inflation cooled from 7.1% a month earlier.
Core CPI, excluding volatile food and energy components, prices climbed 5.7% year-over-year and 0.3% over the prior month. The core CPI reading got here in line as expected from Bloomberg economist forecasts.
The report will factor heavily into the Federal Reserve’s next monetary policy meeting, which starts Jan. 31. Central bankers have made clear they aren’t done with rates of interest increases. Fed Chair Jerome Powell stressed on Tuesday the importance of stable inflation, which may lead the central bank to take actions which can be vital, even when not popular.
On Wednesday, Boston Federal Reserve leader Susan Collins supported a 0.25 point rate of interest increase on the central bank’s next meeting. Echoing those remarks, Philadelphia Fed President Patrick Harker said on Thursday that he thinks rate increases needs to be 25 basis points “going forward.”
Fed policymakers have taken an aggressive path that included 4 consecutive three-quarter point adjustments. The Fed slowed down with a half-point rate move in December, but some market strategists say the fresh inflation data gives no indication whether or not the central bank will make changes to their rate of interest decisions.
“After a lot fanfare and concentrate on today’s CPI report, the discharge is just a little underwhelming,” Seema Shah, Chief Global Strategist, Principal Asset Management, wrote in a press release following the inflation data.
“Not only are the numbers exactly in step with consensus expectations, but they don’t really clear up the 25-basis-point vs. 50-basis-point query for the Fed’s February meeting and add nothing to the late-2023 Fed pivot debate either,” Shah added.
Elsewhere, initial jobless claims in the primary week of 2023 got here in lower at 205,000 in comparison with expectations of 215,000, while continuing jobless claims also got here right down to 1.63 million in comparison with the prior week of 1.694 million.
In market-specific moves, shares of Disney (DIS) rose 2.3% because the media giant faces an upcoming proxy battle as shareholders voted against activist investor Nelson Peltz in his effort to win a spot on the corporate’s board.
Shares of KB Home (KBH) fell nearly 5% after the homebuilder reported a miss on revenue and profits as net orders plunged and it handled a big backlog of homes.
American Airlines (AAL) shares were up 5% after the carrier increased its guidance on earnings for the fourth quarter. The corporate expects adjusted earnings per share of $1.12 to $1.17, up from a previous estimate of $0.50 to $0.70. This follows the Federal Aviation Administration system outage on Wednesday that cascaded right into a nationwide logjam at U.S. airports.
Investors proceed to observe shares of beleaguered retailer Bed Bath & Beyond (BBBY) as bankruptcy bets mount. The meme stock has spiked 200% this week.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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