US stocks rose on Thursday as investors digested new inflation data that showed prices rose at a slower annual rate in December, a report that was in line with economists’ expectations.

The S&P 500 (^GSPC) rose 0.3%, while the Dow Jones Industrial Average (^DJI) rose 0.6%. The technology-heavy Nasdaq Composite (^IXIC) was up 0.6%.

US Treasury yields fell. The yield on the 10-year US Treasury fell to 3.4% from 3.5% Thursday morning. The dollar index fell 0.9 percent to $102.25.

The moves came after data from the Bureau of Labor Statistics showed that prices in December fell 0.1% from the previous month but increased 6.5% from a year earlier. That was in line with expectations, as inflation eased on an annual basis from 7.1% in the previous month.

Core CPI, excluding the volatile food and energy components, prices increased 5.7% year-on-year and 0.3% from the previous month. The core CPI reading was in line as expected by Bloomberg economists.

The report will factor heavily into the Fed’s next monetary policy meeting, which begins on January 31. Central bankers have made it clear that they are not done raising interest rates. Federal Reserve Chairman Jerome Powell on Tuesday stressed the importance of stabilizing inflation, which could prompt the central bank to take necessary measures, even if they are not popular.

On Wednesday, Boston Fed leader Susan Collins backed a 0.25-point rate hike at the central bank’s next meeting. Echoing those comments, Philadelphia Fed President Patrick Harker said Thursday that he believes interest rate increases should be 25 basis points “going forward.”

Fed policymakers took an aggressive path that included four consecutive three-quarter point adjustments. The Fed slowed down interest rate moves by half a point in December, but some market strategists say the new inflation data gives no indication as to whether or not the central bank will make changes to interest rate decisions.

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“After much hype and focus on today’s CPI report, the release was a bit disappointing,” Sima Shah, chief global strategist at Principal Asset Management, wrote in a statement following the inflation data.

“Not only are the numbers not quite in line with consensus expectations, but they don’t really clarify the 25 basis point versus 50 basis point question for the Fed meeting in February and add nothing to the Fed’s pivot in late 2023 either debate.”

Meanwhile, initial jobless claims in the first week of 2023 came in lower at 205,000 compared to expectations of 215,000, while continuing jobless claims also fell to 1.63 million compared to the previous week’s 1.694 million.

Brent crude, the global oil benchmark, ended the day at $84.03 a barrel, while WTI, its US counterpart, ended the day higher at $77.41.

In market moves, shares of Disney (DIS) rose 3.6% as the media giant faces an upcoming proxy battle as shareholders voted against activist investor Nelson Peltz in his bid to win a place on the company’s board.

Shares of KB Home (KBH) fell about 2.8% after the homebuilder reported a failure in revenue and earnings as net orders fell and it dealt with a large backlog of homes.

Shares of American Airlines (AAL) rose 9.7% after the company increased guidance on fourth-quarter earnings. The company expects adjusted earnings per share of $1.12 to $1.17, up from a previous estimate of $0.50 to $0.70. It comes after a crash on Wednesday of the Federal Aviation Administration’s system turned into a nationwide standoff at US airports.

Shares of Taiwanese chipmaker Taiwan Semiconductor (TSM) rose 6.3% after the company warned Thursday of lower revenue for the current quarter and could cut capital expenditures this year compared to last year due to a slowing global economy.

Investors continue to monitor shares of beleaguered retailer Bed Bath & Beyond (BBBY) as bankruptcy bets mount. The meme stock is up 200% this week.

Elsewhere, bitcoin rose nearly 8% on Thursday to trade around $18,796. The cryptocurrency is on track for its longest winning streak since July 2020, according to data compiled by Bloomberg.

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Danny Romero, Yahoo Finance correspondent. Follow her on Twitter @tweet

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