Cautious Uptrend in U.S. Markets Amid Inflation Worries

U.S. markets showed cautious optimism as Treasury yields dipped and stocks edged higher, reacting to December producer prices that rose less than expected. Investors remained wary ahead of upcoming consumer price data and Q4 earnings reports, which are likely to influence Federal Reserve's interest rate decisions in 2024.

The U.S. markets displayed a cautious uptrend as Treasury yields dipped and the S&P 500 ended slightly higher on Tuesday. This came after data indicated U.S. producer prices increased less than anticipated in December. Despite this, investors remained cautious, waiting for the consumer price data due on Wednesday and the inception of quarterly earnings reports.

Concerns over persistent inflation lingered among investors. The producer price index climbed by 0.2% in December, falling short of the expected 0.3% increase. The Federal Reserve is unlikely to cut interest rates before the second half of 2024. Upcoming consumer price index data is expected to reinforce this stance with anticipated inflation figures.

With fourth-quarter earnings season on the horizon, major U.S. banks are expected to reveal strong earnings driven by thriving dealmaking and trading activities. The Dow closed with gains, reflecting slight optimism, while the Nasdaq saw marginal declines. Market watchers remain cautious, given looming political uncertainties and economic shifts under President-elect Trump's administration.

(With inputs from agencies.)