Wall Street Today | Bitcoin ETFs Approved (For Real?)

The S&P 500 hovered ten points below its all-time closing high of 4,796.56 set two years ago.

U.S. stock indexes continued to move higher on Wednesday afternoon as the S&P 500 edged closer to an all-time high ahead of the December inflation report, which should offer more clues on when the Federal Reserve can dial back its almost two-year effort to tighten monetary policy.

New York Federal Reserve President John Williams said that U.S. interest rates will likely need to stay high "for some time" until officials are confident the inflation rate is returning to 2%, at a speech in White Plains, N.Y. Wednesday.

The New York Fed chief pointed to major progress in slowing the inflation rate. The consumer price index, for example, has decelerated to an annual rate of 3.1% from a 40-year peak of 9.1% in mid-2022. Williams said he expects inflation to slow to 2.25% by year's end and reach the Fed's 2% goal by 2025. Before the pandemic, U.S. inflation rose slightly less than 2% a year.

Williams said the labor market would need to soften a bit more, potentially bumping up the unemployment rate to 4% from the current level of 3.7%.

The Fed jacked up a key short-term U.S. interest rate to a top end of 5.25% last summer, from near zero in the spring of 2022, to tame inflation.

Financial markets expect the Fed to begin cutting rates as soon as March, but Williams and other senior officials have been pushing back on that idea. Williams cautioned the Fed has to remain vigilant, saying, "It is important to stress that we still have a ways to go to get inflation back to" the long-term target.

Shortly after the market closed, Reuters, Bloomberg, and other media sources reported that Bitcoin ETFs were approved by the SEC. Tuesday, the SEC official Twitter account posted a similar message, leading to quick newsflashes and swift corrections after discovering the post was a hack.

Wednesday, President of the SEC Gary Gensler released a statement confirming the news, saying the courts forced him to approve the ETFs. He said when the SEC had failed to give a good reason to halt the listings, the court decided to push the SEC for approval.

"The court, therefore, vacated the Grayscale Order and remanded the matter to the Commission," he said. "Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares."

West Texas Intermediate crude closed lower on Wednesday, falling off early highs as Yemen's Houthi militants launched their largest attack to date on Red Sea shipping after the Energy Information Administration reported an unexpected rise in US oil inventories.

The Energy Information Administration reported US oil inventories rose by 1.3-million barrels last week, while the consensus estimate of analysts polled by Reuters expected a drop of 0.7-million barrels. Gasoline and distillate inventories were also sharply higher, while US oil production stood at a record 13.2 million barrels daily.