The stock market surged on Wednesday after a tame inflation report showed progress on price hikes. The Dow Jones Industrial Average advanced 703.27 points, or 1.65%, to close at 43,221.55. The S&P 500 climbed 1.83% to 5,949.91, and the Nasdaq Composite rallied 2.45% to 19,511.23.
December’s consumer price index revealed that core inflation, excluding food and energy, rose 3.2%. This was a slight decrease from the previous month and lower than the 3.3% estimated by economists. Headline inflation increased 2.9% on a 12-month basis, meeting forecasts.
John Kerschner, head of U.S. securitized products and portfolio manager at Janus Henderson Investors, said, “The market is breathing a sigh of relief as back-to-back inflation gauges, PPI yesterday and CPI this morning, came in slightly below expectations. Perhaps most importantly, today’s CPI number takes additional rate hikes off the table, which some market participants were beginning to prematurely price in.
Treasury yields dropped sharply on the back of the CPI report and were down roughly 13 basis points at about 4.65%. Growth stocks surged, with Tesla and other Big Tech names popping around 8% and 3%, respectively, as Treasury yields decreased.
Fourth-quarter earnings reporting started positively Wednesday, with big banks broadly topping the Street’s expectations. Bank of America shares rose nearly 2% after reporting an EPS and revenue beat. Goldman Sachs shares popped 6% after the bank posted a top- and bottom-line beat in the previous quarter, and JPMorgan Chase shares jumped more than 6% after the bank said net interest income would be 1% to 3% higher in 2025.
Stock market surges on inflation progress
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, said, “We got a good start to earnings season today. Bank earnings are key because the financial sector is so tied to the general economy. For these big banks to put up bullish numbers today, I think it does bode well.”
In other news, shares of FTAI Aviation plunged by as much as 40% on Wednesday after Muddy Waters released a report challenging the company’s accounting techniques. FTAI lost over $6.3 billion in market value at its session low. Economic activity ticked up over the past seven weeks, as did hiring and prices, according to an update from the Federal Reserve.
The Fed characterized growth as up “slightly to moderately” across its 12 districts as consumer spending and vehicle sales increased while construction pulled back due to higher costs. Oil prices touched levels not seen since August, providing upward momentum to energy stocks. U.S. crude hit $80.04 at session highs, marking its most expensive level since Aug. 13. Brent crude rose as high as $81.90, a level last reached on Aug. 12.
UBS predicted continued stock volatility in the coming weeks and months as investors react to incoming data and policy news amid rate uncertainty.
