New York Stock Market Slightly Up Early Ahead of CPI... Bitcoin Down Over 3%

The three major indices of the U.S. New York stock market showed slight gains early in trading on the 10th (local time) ahead of this week's release of inflation indicators such as the Consumer Price Index (CPI) and corporate earnings announcements.

At around 10:25 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 37,553, up 0.07% from the previous close. The S&P 500, which is centered on large-cap stocks, was up 0.09% at 4,760, and the tech-heavy Nasdaq index was up 0.12% at 14,875.

Currently, within the S&P 500, energy, financials, and materials stocks are declining, while telecommunications, technology, and consumer discretionary stocks are rising. Following a hacking incident after the previous day's market close, where the U.S. Securities and Exchange Commission (SEC)'s official X account mistakenly posted that a Bitcoin spot ETF had been approved, cryptocurrency exchanges such as Coinbase and Marathon Digital have each fallen by 4-5%. Intuitive Surgical surged more than 6% after its preliminary earnings exceeded Wall Street expectations. Homebuilder Lennar rose more than 3% on news of a dividend increase. While Taiwan's TSMC reported quarterly sales exceeding Wall Street forecasts, most other leading semiconductor stocks, excluding Nvidia, are collectively weak.

[Image source=Reuters Yonhap News]

Investors are showing cautious trading as they await this week's scheduled CPI release and corporate earnings announcements led by major banks. Amid growing caution that the market's expectations for a Federal Reserve (Fed) rate cut may be excessive, investor confidence in a short-term rally appears to have diminished. Emily Rolland, co-chief investment strategist at John Hancock Investment Management, said, "We ended last year with a Fed pivot party," adding, "We may currently be experiencing a slight hangover."

Wall Street expects the December CPI, to be released the next morning, to rise 0.2% month-over-month and 3.3% year-over-year. This represents a larger increase than the previous month. However, the core CPI, which excludes the volatile energy and food sectors, is estimated to have risen 0.2% month-over-month and 3.8% year-over-year, indicating a slowdown compared to the prior month. On the 12th, the Producer Price Index (PPI), a wholesale price gauge, will also be released. Investors are likely to use this data to reaffirm the disinflation trend and gauge the future direction of monetary policy. On the same day, John Williams, president of the New York Federal Reserve Bank and considered the Fed's third-ranking official, will speak. Public remarks by Thomas Barkin, president of the Richmond Fed, and Neel Kashkari, president of the Minneapolis Fed, are also scheduled this week.

Despite a retreat in early-year expectations for rate cuts, the market still favors a scenario of a rate cut as early as March following a pause in January. According to the Chicago Mercantile Exchange (CME) FedWatch tool, interest rate futures markets are pricing in nearly a 70% chance that the Fed will cut rates by at least 0.25 percentage points in March. In this context, Jan Hatzius, chief economist at Goldman Sachs, reaffirmed the possibility of a first rate cut in March during a webinar hosted by the think tank Atlantic Council the previous day.

This week also marks the start of the earnings season on Wall Street, with major banks such as JPMorgan, Wells Fargo, and Citigroup reporting their results. UnitedHealth Group and Delta Air Lines will also release earnings on the same day. According to FactSet, the net income of S&P 500-listed companies for the fourth quarter of last year is estimated to have increased 1.3% year-over-year, marking two consecutive quarters of growth. Market attention is currently focused on first-quarter earnings guidance.

Bitcoin prices have fallen about 3% following the SEC hacking incident the previous afternoon. The market is awaiting the SEC's official announcement regarding the approval of a Bitcoin ETF.

In the New York bond market, the benchmark 10-year U.S. Treasury yield fell slightly to around 4.01%. The 2-year yield, which is sensitive to monetary policy, dropped to 4.35%. The dollar index, which measures the value of the U.S. dollar against six major currencies, is steady around 102.52. International oil prices are rising. West Texas Intermediate (WTI) crude oil is trading above $73.4 per barrel, up more than 1.7% from the previous close.

European stock markets are declining. Germany's DAX index fell 0.15%, the UK's FTSE index dropped 0.31%, and France's CAC index is down 0.13%.