Wall Street closes flat as investors assess inflation risks

NEW YORK - US stocks ended Jan 8 little changed, as major indexes failed to stray frar from the unchanged mark, with investors digesting the impact of two conflicting sets of jobs data and a report that said President-elect Donald Trump was mulling a national economic emergency declaration on inflation.

“Inflation is the wild card in 2025. There are lots of things that potentially have the risk to shift inflation back upward,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

The minutes of the Federal Reserve’s Dec 17-18 meeting showed on Jan 8 that officials saw a rising risk that price pressures may remain sticky as policymakers began wrestling with the impact of policies expected from the incoming Trump administration.

Market sentiment was fragile after a CNN report said Trump was mulling building the new tariff program by using the International Economic Emergency Powers Act, which authorizes a president to manage imports during a national emergency.

Benchmark 10-year yields peaked at 4.73 per cent, the highest since April 25, to retreat slightly to 4.681 per cent later in the afternoon.

Ahead of Trump taking office later in the month, concerns about potential surcharges on US trade partners have kept investors on edge as Trump’s policies, including mass deportations and tariffs, could stoke inflation pressures.

“If wider tariffs are implemented it could have a short-term impact on inflation,” said Thomas Hayes, chairman at Great Hill Capital LLC. “The Fed will sit back and see if he (Trump) does enact punitive tariffs and if he does, how much of that potential inflationary impact will be offset by the cuts in government spending.”

According to preliminary data, the S&P 500 gained 8.49 points, or 0.13 per cent, to end at 5,917.52 points, while the Nasdaq Composite lost 10.96 points, or 0.06 per cent, to 19,478.72. The Dow Jones Industrial Average rose 93.75 points, or 0.22 per cent, to 42,622.11.

Most of the 11 S&P 500 sectors posted modest gains, led by the healthcare index.

The Russell 200 Index tracking domestically focused small-cap companies dropped.

Megacaps were mixed with Microsoft up, while Alphabet and Meta fell.

Investors also assessed an ADP National Employment Report that showed private payrolls growth slowed sharply in December, although a separate Labor Department report said jobless claims for the previous week fell.

The Fed has stayed put on interest rates, and traders now expect the first trim this year in either May or June, according to the CME Group’s FedWatch Tool.

Fed Governor Christopher Waller said inflation should continue falling in 2025 and allow the central bank to further reduce interest rates, though at an uncertain pace.

Worries about higher inflation following upbeat economic data weighed on the benchmark S&P 500 and the tech-heavy Nasdaq on Tuesday, when the indexes logged their biggest daily declines since the Fed’s December meeting in which the central bank issued a cautious stance on upcoming interest rate cuts.

EBay rose after Meta Platforms said it will launch a test showing the e-commerce firm’s listings on Facebook Marketplace.

Edison International dropped sharply. Its Californian subsidiary cut power to customers to prevent damage to distribution lines from a wildfire.

Quantum-computing stocks Rigetti Computing, IonQ and Quantum Computing plunged after Nvidia boss Jensen Huang said computers based on the emerging technology are as much as 30 years away.

Markets will be closed on Jan 9 for a national day of mourning to mark the death of former President Jimmy Carter. REUTERS