Major indexes are lower after December CPI readings showed inflation came in greater than expected.
Portfolio Pulse from Benzinga Newsdesk
Major stock indexes declined following the release of December CPI data, which indicated that inflation was higher than anticipated.
January 11, 2024 | 5:19 pm
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NEGATIVE IMPACT
The Dow Jones Industrial Average ETF (DIA) experienced a decline as the December CPI data suggested persistent inflation, potentially leading to continued aggressive monetary policy.
The higher-than-expected inflation rate is likely to sustain or increase the pace of interest rate hikes by the Federal Reserve, which can dampen economic growth and corporate earnings, negatively impacting the stock prices represented by the DIA ETF.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
The Russell 2000 ETF (IWM), which tracks small-cap stocks, saw a decrease in value as the unexpected inflation data could lead to a tougher economic environment for smaller companies.
Small-cap companies in the IWM ETF are often more sensitive to economic shifts and higher financing costs, which can be exacerbated by higher inflation and the resulting monetary policy tightening.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The NASDAQ-100 ETF (QQQ), with a focus on technology and growth stocks, declined as the inflation report may prompt the Fed to maintain aggressive interest rate hikes, affecting growth stock valuations.
Technology and growth stocks, which are a significant part of the QQQ ETF, tend to be more adversely affected by rising interest rates due to their reliance on future earnings, which are discounted more heavily as rates rise.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80