US stocks fall as investors digest hot December inflation report

• US stocks declined Thursday as traders mulled a hotter-than-expected December CPI reading.
• Housing prices, in particular, kept inflation elevated last month.
• The SEC on Wednesday approved 11 spot bitcoin ETFs for trading in the US.

US stocks dropped on Thursday following a hotter-than-expected inflation report.

Consumer prices accelerated 0.3% in December month on month, bringing the annual rate to 3.4%. Dow Jones estimates had expected a 0.2% monthly climb and 3.2% annually. That's hotter than the expected monthly increase of 0.2%, as well as the forecast for a year-over-year increase of 3.2%. 

Housing prices, in particular, kept inflation elevated, according to the data from the Bureau of Labor Statistics, with the index for shelter accounting for more than half the monthly increase.

"This print should challenge the market's expectations of rate cut timing," said Alexandra Wilson-Elizondo, the deputy chief investment officer of multiasset solutions at Goldman Sachs Asset Management. "There is nothing in the report to cause the Fed to hurry to cut rates. However, because it was not too hot, it should leave the hopes of a soft landing intact."

The hot consumer-price-index report adds to the narrative that the economy may not be cooling as much as the Fed would like. Last week, data showed nonfarm payrolls rose more than estimated in December, with the unemployment rate clocking in at 3.7% for the second month in a row.

Goldman Sachs strategists do not expect the latest CPI data to change the Federal Reserve's dovish outlook and ultimately predict rate cuts to begin in the middle of the year, rather than in March.

Elsewhere in markets, the Securities and Exchange Commission on Wednesday approved 11 spot bitcoin ETF products for trading in the US.

The long-awaited move broadens access to the world's largest cryptocurrency, as the funds allow investors to gain exposure to bitcoin without directly buying the token or setting up a digital wallet.

Here's where US indexes stood just after midday in New York on Thursday: 

• S&P 500: 4,749.55, down 0.71% 

• Dow Jones Industrial Average: 37,468.88, down 0.60% 

• Nasdaq composite: 14,840.63, down 0.87% 

Here's what else is going on: 

• Everything to know about the SEC's approval of bitcoin ETFs.
• Critics are sounding the alarm on regulators and bitcoin.
• An investment strategist said bitcoin ETFs would be a great place to put your "lottery ticket money."
• The wealthiest 10% of Americans own 93% of stocks, even with market participation at a record high.
• Investors in China are so sick of losses they're pouring money into Japanese stocks.
• Nvidia stock has hit a record high.

In commodities, bonds, and crypto: 

• Oil prices climbed, with West Texas Intermediate up 2.5% to $72.19 a barrel. Brent crude, the international benchmark, rose 2.2% to $78.54 a barrel.
• Gold edged up 0.14% to $2,030.60 an ounce.
• The 10-year yield was nearly flat at 4.026%.
• Bitcoin climbed 3.91% to $47,613.