The stock market soared on Wednesday as inflation cooled and major U.S. banks reported strong profits. The Dow Jones Industrial Average jumped 703 points, or 1.65%, to close at 43,222. The S&P 500 climbed 1.83%, and the Nasdaq Composite rallied 2.45%.
It was the best day for all three indexes since November. The Consumer Price Index showed that core inflation, which excludes food and energy, rose 3.2% in December. This was slightly lower than the previous month and below economists’ expectations of 3.3%.
Headline inflation increased 2.9% on a 12-month basis, matching forecasts. John Kerschner, head of U.S. securitized products 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.”
Treasury yields fell sharply after the inflation report, with the 10-year yield dropping about 13 basis points to 4.65%.
Growth stocks like Tesla and other tech names surged as yields declined. The fourth-quarter earnings season started on a positive note, with big banks beating expectations.
stocks surge as inflation cools
JPMorgan Chase shares rose nearly 2% after reporting strong fixed-income trading and investment banking results. Bank of America and Wells Fargo shares jumped more than 6% after topping estimates and projecting higher net interest income in 2025. Goldman Sachs shares gained 6% after outperforming fourth-quarter expectations.
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, said, “We got a good start today to earnings season. The 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.”
However, shares of FTAI Aviation plunged as much as 40% after a Muddy Waters report challenged the company’s accounting techniques.
FTAI lost more than $6.3 billion in market value at the session low. The Federal Reserve’s Beige Book showed that economic activity, hiring, and prices ticked up over the past seven weeks. Oil prices also hit their highest levels since August, with West Texas Intermediate crude touching $80.04 and Brent rising to $81.90.
Energy stocks rallied in response. UBS warned that stock volatility may persist in the coming weeks and months as investors react to incoming data and policy news amid rate uncertainty.
