Stocks fall, yields inch higher; focus on upcoming US inflation data, earnings

By Caroline Valetkevitch

NEW YORK (Reuters) - Global stock indexes fell and Treasury yields edged higher on Tuesday, with investors bracing for key U.S. inflation data this week and the start of fourth-quarter company earnings.

The dollar was mixed, while in cryptocurrencies, bitcoin fell but remained near its strongest level since April 2022 amid anticipation the Securities and Exchange Commission will approve spot bitcoin exchange-traded funds (ETFs).

All eyes will be on the U.S. consumer prices report for December, due on Thursday. It is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis.

Investors are looking for clues on when the Federal Reserve may begin cutting interest rates. Fed funds futures indicate a 64% probability of a March rate cut, down from 70% a week ago, according to the CME Group’s FedWatch Tool.

"We'll be waiting for the inflation numbers and on Friday the earnings season begins with the big banks," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

But he also said there are likely investor jitters following news from Samsung Electronics Co Ltd. Samsung reported a likely 35% drop in fourth-quarter operating profit on Tuesday, much worse than analysts expected as weak consumer demand persisted in many of its businesses even as memory chip prices improved.

Results from some of the biggest American banks on Friday will unofficially kick off the U.S. earnings season.

The Dow Jones Industrial Average fell 259.30 points, or 0.68%, to 37,426.78; the lost 19.48 points, or 0.41%, to 4,744.23; and the lost 56.65 points, or 0.38%, to 14,787.39.

Boeing shares were down 1.3% as the U.S. National Transportation Safety Board said late on Monday it could not yet tell whether a recovered cabin panel that blew off an Alaska Airlines Boeing 737 MAX 9 plane during a flight last week had been properly attached.

The MSCI world equity index, which tracks shares in 49 nations, lost 0.37%, while European stocks were down 0.2%. Earlier, Japan's Nikkei share average hit its highest level since March 1990.

Euro area unemployment data released on Tuesday came in below expectations.

The 10-year benchmark U.S. Treasury yield was up at 4.02%.

The dollar slipped 0.09% against the yen to 144.09. The euro was down 0.1% on the day at $1.0934, while the U.S. dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up 0.2% at 102.49.

The dollar index hit a five-month low in December, with investors betting the Fed will cut rates sooner rather than later.

In energy, U.S. crude ticked up 1.75% to $72.03 a barrel. Brent crude rose to $77.28 per barrel. Gold gained, with spot gold was up 0.4% at $2,035.19 per ounce.

(Additional reporting by Alun John in London and Scott Murdoch in Sydney. Editing by Sharon Singleton, Andrew Heavens and Jonathan Oatis)