New York – The Dow Jones Industrial Average limped to a negligible gain on Thursday despite discouraging economic data pointing to persistent inflation and a ballooning national debt.
Bitcoin prices retreated from recent highs as the first exchange-traded funds dedicated to the cryptocurrency began trading. Star fund manager Cathie Wood snapped up shares of a plummeting stock for one of her flagship ETFs.
Meanwhile, Microsoft briefly eclipsed Apple as the world’s most valuable company by market capitalization, only to relinquish the lead by the closing bell.
A trio of stocks inched closer to potential buy points, including DoubleVerify, Cadre and Tradeweb Markets. Each notched gains that brought them nearer to key technical milestones.
Stocks Stage Modest Rebound Following Grim Inflation Report
Major indexes shook off steep early declines triggered by the latest inflation statistics, which signaled price increases continue to outpace projections.
The Consumer Price Index, which measures costs for household goods and services, climbed 0.3% in December compared to the previous month. Economists had anticipated a milder 0.2% uptick.
The year-over-year increase hit 3.4%, surpassing economists’ estimates yet again. Core inflation, which omits food and energy, matched expectations with a 0.3% monthly gain but posted a 3.9% jump from last year – its highest 12-month rate since 1991.
The data paint an unsettling picture of persistent inflation despite the Federal Reserve’s aggressive interest rate hikes intended to rein it in. Markets are betting the Fed will ease up on rate increases soon, but stubborn inflation may delay plans for a policy pivot.
“The path toward price stability remains uncertain, and today’s CPI report suggests that the Fed’s initial rate cut may be later than the market is hoping for,” noted LPL Financial Chief Global Strategist Quincy Krosby in comments on the new figures.
In more discouraging economic news, the federal budget deficit grew to just under $510 billion in the first quarter of fiscal 2023, propelling total government debt past $34 trillion for the first time.
The lone bright spot came from the Labor Department’s weekly report on jobless claims, which dipped by 1,000 to 202,000 – lower than economists anticipated and landing at the lowest level since October. But the still-tight labor market gives the Fed more latitude to maintain an aggressive policy stance.
Bitcoin Slides From Recent Highs as New ETFs Debut
The Nasdaq Composite pared steep early losses to eke out a slight gain as the technology-heavy index once again showed resilience. Electric vehicle titan Tesla skidded nearly 3% to rank among the laggards.
The S&P 500 shed 0.1% but trimmed steeper declines from earlier in the trading session. Netflix popped 2.9%, buoyed by positive analyst commentary. The streaming giant is trading comfortably above a 482.70 buy point after breaking out of a base pattern.
Most S&P sectors ended in the red, with real estate and utilities bruised the most. The tech and energy groups managed modest gains against the bearish backdrop.
Small caps weren’t so fortunate, with the Russell 2000 sliding 0.8% to take the brunt of the selling pressure. But growth stocks fared relatively well – the Innovator IBD 50 ETF reversed its losses to eke out a 0.1% advance.
Meanwhile, Treasury yields trended lower across the curve. The benchmark 10-year Treasury note yield fell 4 basis points to 3.99%, and the 30-year yield dipped 1 basis point to 4.19%. Yields on the 5-year note tumbled 8 points to 3.90%, while the 2-year yield plunged 11 points to 4.27%.
Falling yields on shorter-term Treasuries reflect easing rate hike expectations. The 2-year yield closely tracks expectations for Fed policy.
Microsoft Briefly Surpasses Apple as Most Valuable Company
The Dow managed to scrape out a negligible 15 point gain despite the worrisome economic releases.
Microsoft briefly overtook Apple as the world’s most valuable public company by market capitalization during intraday trading before falling back by the closing bell. Microsoft gained 0.5% while Apple dipped fractionally.
MSFT briefly topped a 384.30 buy point in a flat base pattern. The software behemoth has delivered exemplary performance amid the turbulent market environment.
The Dow’s top performer was Salesforce, which vaulted nearly 3% following an analyst upgrade.
On the downside, Boeing slid nearly 2% as Transportation Secretary Pete Buttigieg said the aircraft maker’s 737 Max 9 jet won’t be cleared to fly until safety concerns are fully addressed.
Retail pharmacy giant Walgreens was the Dow’s worst laggard with a 2% decline.
In cryptocurrency markets, Bitcoin prices retreated from 24-hour highs above $49,000 after the Securities and Exchange Commission approved the first spot Bitcoin ETFs on Wednesday. The pioneering digital coin hovered near $46,000 as per CoinDesk data.
Trading was mixed in the new Bitcoin ETFs on their first day. The Grayscale Bitcoin Trust popped early before paring gains to close up 0.5%, while the iShares Bitcoin Trust tumbled 4.7%.
Cathie Wood’s Ark Invest scooped up shares of software firm Unity Software for its flagship ARK Innovation ETF. But the purchase failed to lift Unity, which sank 2.4% to extend its losses from a late December peak.
DoubleVerify, Cadre and Tradeweb Inch Closer to Potential Buy Points
Some stocks resilient to the market downdraft flashed potential buy signals.
Cybersecurity and digital media firm DoubleVerify rallied 2.4%, nearing a 38 cup-with-handle buy point.
Safety equipment maker Cadre, which boasts a near-perfect IBD Composite Rating of 99, climbed 4.2% toward a 33.62 flat base entry.
Financial technology company Tradeweb Markets edged 1.3% higher, closing in on a 97.18 buy point in its own flat base pattern. Its strong earnings growth gives it a stellar 96 EPS rating.
While the major indexes treaded water amid mixed signals on inflation and growth, pockets of strength emerged in select growth stocks weathering the volatility. Their ability to hold up bodes well for potential upside when the market regains its footing.
