4E: US Core CPI Unexpectedly Cools, Reigniting Rate Cut Expectations, US Stocks and Crypto Market Soar

BlockBeats News, January 16, Wednesday. The latest US inflation report, released today, showed that the overall CPI for December was broadly in line with expectations, while the core CPI unexpectedly fell, marking the first decline in six months and coming in below both expectations and the previous value. Following the data release, traders adjusted their expectations, bringing forward the anticipated timing of the first Fed rate cut from September to June. The probability of two rate cuts during the year has risen, essentially returning to levels seen before the Non-Farm Payrolls report.

According to 4E monitoring, the cooling of inflation combined with impressive US bank earnings reports provided a strong boost to the US stock market, recording its biggest single-day gain since the day after the US presidential election. The three major indices saw significant gains: the Dow rose by 1.65%, the S&P 500 rose by 1.83%, marking the largest single-day gain since November 2024, and the Nasdaq rose by 2.45%, ending a previous five-day decline. Large-cap tech stocks saw a general rise, with Tesla leading the gains at 8.04% and Nvidia rising by 3.37%, breaking a five-day losing streak.

The crypto market experienced a collective rebound, with Bitcoin swiftly expanding its gains after the CPI data release, once again surpassing $100,000. The Coinbase BTC premium turned positive again, and yesterday the Bitcoin spot ETF saw a net inflow of $723 million, reversing a four-day decline. The altcoin market also enjoyed a long-awaited surge, with market sentiment warming up. The AI Agent sector, after several days of deep retracement, has seen a strong collective rebound, demonstrating remarkable resilience. Data shows that since the beginning of this week, the total market value of AI Agents has rebounded from a recent low of approximately $11.4 billion to nearly $18.2 billion, representing a 60% increase.

In the commodities market, post the CPI data release, the US Dollar Index plummeted but later staged a strong recovery, ultimately ending with a 0.15% decline. The weakening US dollar supported a rise in oil prices, with US oil surging over 3% to reclaim the $80 per barrel level. The price of gold continued its upward trend, with spot gold closing up $19.20 on Wednesday, a 0.72% increase.

The unexpected decline in the core CPI has shown the market signs of inflation cooling, but a single data point will not alter the short-term stance of Fed officials, as it will take a few months of further progress on inflation for any significant changes. The market still anticipates that this month's rate-setting meeting will maintain the status quo on interest rates. eeee.com is a financial trading platform that supports assets such as cryptocurrency, stock indices, bulk gold, and forex. It recently launched a USDT stablecoin financial product with an annualized yield of 5.5%, providing investors with a potential hedging option. 4E reminds you to be mindful of market volatility risks and to allocate your assets sensibly.