CPI met expectations, but stocks closed lower on news of a cap on credit-card interest rates [New York Market Briefing]

Major U.S. stock indexes in New York fell across the board. Financial shares weakened on news that U.S. President Donald Trump would regulate credit-card interest rates. The December Consumer Price Index (CPI) largely matched expectations.

On the 13th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 49,191.99, down 398.21 points (0.8%) from the previous session. The Standard & Poor’s (S&P) 500 fell 13.53 points (0.19%) to 6,963.74, and the Nasdaq ended down 24.03 points (0.1%) at 23,709.87.

By sector, financials slid 1.84%. Energy rose 1.53%, while consumer staples also gained more than 1%.

According to the U.S. Department of Labor, the December CPI rose 0.3% from the prior month and increased 2.7% from a year earlier. Core CPI, which excludes volatile energy and food prices, rose 0.2% month on month and increased 2.6% year on year.

The headline figure met market forecasts, while the core figure came in below expectations. The prevailing view in the market was that the CPI report was broadly benign.

Still, while it matched expectations, the annualized pace of consumer inflation remains above 3%. The gap with the U.S. central bank’s (Fed) 2% target has not narrowed.

As a result, equities did not attach much significance to the CPI report. Stock-index futures jumped immediately after the December CPI release, but gave up all gains as regular trading began.

Markets focused on policy uncertainty. JPMorgan Chase posted fourth-quarter results that beat expectations. However, JPMorgan shares fell 4.19% as President Trump pushed a plan to cap credit-card interest rates at 10% for one year. Visa and Mastercard fell 4.46% and 3.76%, respectively.

Wall Street banks have opposed the move and say they are prepared to sue. With the measure adding uncertainty to the financial sector, selling pressure intensified.

Among mega-cap tech companies with market capitalizations of more than $1 trillion, Alphabet, Nvidia, Apple and Broadcom rose around 1%. Alphabet also gained more than 1% on the day, shoring up its $4 trillion market cap and No. 2 position.

Walmart rose another 2% as index-tracking inflows came in ahead of its inclusion in the Nasdaq 100 following its move to a Nasdaq listing. Its market cap stood at $959 billion, closing in on $1 trillion.

Energy shares were broadly strong. Exxon Mobil rose 2.02% and Chevron gained 0.83%. Concerns about disruptions to oil supply chains were priced in as the likelihood increased that the U.S. could militarily intervene in protests in Iran.

According to the CME FedWatch Tool, the federal funds futures market priced in the probability of a rate hold in January at as high as 97.2%.

By Young Gi Jin, Hankyung.com reporter young71@hankyung.com