The stock market trimmed losses by roughly half in afternoon trading Thursday as inflation and job-market reports showed the U.S. economy may have to wait longer for interest-rate cuts.
Indexes were volatile after the consumer price index came in a touch hotter than expected. The S&P 500 and Nasdaq composite opened higher but both reversed lower. At 1:18 p.m. ET, the S&P and Nasdaq were down 0.4%.
The Dow Jones Industrial Average lost 0.3%. Dow component Salesforce climbed 1.8%, rising to its highest level in more than one year. Baird upgraded the stock to outperform from neutral.
Microsoft, which is in all three major indexes, climbed above a 384.30 buy point out of a flat base in heavy volume. But the stock reversed and fell below the entry in afternoon trading, while the relative strength line continued to lag.
Earlier in the stock market today, Microsoft briefly surpassed Apple for highest market capitalization. Around 11 a.m. ET, Apple was still No. 1 with a market cap of $2.873 trillion, according to Dow Jones Market Data. Microsoft was at $2.863 trillion and No. 3 Alphabet was at $1.796 trillion.
Volume rose on both the New York Stock Exchange and Nasdaq compared with the same time on Wednesday.
The small-cap Russell 2000 was down 1.4% and has not been able to trim losses like other major indexes.
Bitcoin ETFs Start Trading
The price of bitcoin was up to about $46,300.
Late Wednesday, the Securities & Exchange Commission approved the first ETFs that track spot prices of bitcoin. The 11 funds started trading on the stock market Thursday following the approval.
Fidelity Wise Origin Bitcoin Trust was among the most heavily traded, with more than 10 million shares as of 11:45 a.m. ET. Grayscale Bitcoin Trust, which converted from a trust to a spot ETF, had more than 38 million in volume. IShares Bitcoin Trust topped 25 million shares.
The Innovator IBD 50 ETF reduced its decline to 0.4%. Much of its damage was due to GigaCloud Technology, which sold off nearly 7%. Dorian LPG also hurt the IBD 50 after it slid 7.5% and sank below its 50-day moving average.
Buffett's Berkshire Adds OXY Shares
Occidental Petroleum climbed 0.7% after disclosing that Warren Buffett's Berkshire Hathaway raised his stake in the company to 34%. That's an increase from 27.7%. Buffett may be taking advantage of slumping price performance for the oil-and-gas exploration company. The stock is near 52-week lows and has a 21 Relative Strength Rating.
Also in the energy sector, Chesapeake Energy trimmed gains to 3.7% in afternoon trading after the company and Southwestern Energy confirmed they are merging in an all-stock transaction valued at $7.4 billion. The deal would create one of the largest U.S. natural-gas producers. Shares of Southwestern were volatile and down 1.8%.
The Energy Select Sector SPDR ETF rose 0.2% and remained below its 50-day and 200-day moving averages. Iran seized an oil tanker in the Gulf of Oman. Iran only said it seized the ship due to a court order. The ship had been involved in a dispute between the U.S. and Iran.
In another setback for the electric-vehicle industry, Hertz skidded more than 3% after the car-rental company said it will sell about 20,000 electric vehicles from its U.S. fleet.
The company cited weak EV demand among its customers, and higher repair costs for the vehicles. It also didn't help that Tesla cut prices on its electric cars. Hertz said it will use some proceeds from the sale to buy gasoline-powered vehicles. Tesla was down more than 3%.
Stock Market Chills On Inflation Data
The consumer price index climbed 0.3% in December and 3.4% on an annual basis — both modestly higher than the previous month and above economists' forecasts. Core CPI, which excludes food and energy items, rose 0.3% from the previous month and 3.9% on an annual basis. Monthly gains were the same as in November and down from 4% on an annual basis. Forecasts were for 0.2% and 3.8% gains, respectively.
Before the open, stock market futures fell after the inflation data was released. It showed a slowdown from a rapid pace of declining inflation.
Brian Coulton, Fitch Ratings chief economist, said the message from the latest CPI is that core inflation is proving sticky.
"While the problem of high goods inflation looks to have been solved — with core goods prices flat or falling in sequential terms for six or seven months now — there is still quite a bit of work to do in bringing down services inflation," Coulton said in an email. The services inflation rate remains above 5% year over year, he added.
Coulton went on: "This is not consistent with overall inflation returning to 2% on a sustained basis. This will give the Fed grounds for caution and they are unlikely to cut rates as quickly as the markets currently expect."
Claims for jobless benefits last week edged down by 1,000 to 202,000, the Labor Department reported. Economists had forecast 209,000, according to Econoday.
