US stocks slipped on Thursday morning despite a fresh reading on December inflation that came in slightly hotter than economists had expected, raising new questions about the Federal Reserve’s path on interest rates.
The S&P 500 (^GSPC) fell about 0.8% after the benchmark ended Wednesday at its highest close since January 2022, just short of notching a new record. The Dow Jones Industrial Average (^DJI) slid 0.6% and the Nasdaq (^IXIC) led the losses, falling almost 0.9%.
Stocks have struggled this week as investors counted down to the US consumer inflation reading for December. That reading showed a slightly bigger jump than expected, as prices ticked up 0.3% month over month and 3.4% year over year. On a “core” basis, which excludes the volatile food and energy categories, inflation rose 3.9% over the past year.
The print was seen as critical for traders who have been increasingly pricing in the odds of a “soft landing” — where inflation retreats to 2% without an economic downturn — since the last CPI report.
Ahead of its quarterly financial update on Friday, Citigroup (C) said it will take more than $3 billion in one-time reserves and expenses in the results. The fourth quarter earnings season is crucial for stocks, given their dismal performance this year so far.