Stocks surged on Wednesday following the December Consumer Price Index (CPI) report, which indicated slowing core inflation and strong quarterly earnings from major US banks.
The Dow Jones Industrial Average jumped 1.65%, or 703.27 points, 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. This marked the biggest single-day gain for all three major averages since November 6th.
December’s CPI showed a 3.2% increase in core inflation (excluding food and energy), slightly below November’s figure and the 3.3% forecast by economists polled by Dow Jones, according to the Bureau of Labor Statistics. Overall inflation rose 2.9% year-over-year, matching expectations.
John Kerschner, head of US securitized products and portfolio manager at Janus Henderson Investors, noted the market’s positive reaction to consecutive inflation reports (PPI and CPI) coming in below expectations. He highlighted the CPI data’s importance in potentially preventing further interest rate hikes, which some had anticipated.
The 10-year Treasury yield fell sharply after the CPI report, dropping around 13 basis points to roughly 4.65%. Growth stocks, including Tesla and Nvidia, saw significant gains, rising approximately 8% and 3% respectively, in response to the falling yields.
The fourth-quarter earnings season started strong, with major banks beating expectations. JPMorgan Chase shares rose nearly 2% after reporting better-than-expected earnings per share (EPS) and revenue, driven by strong fixed-income trading and investment banking.
Goldman Sachs shares surged 6% after exceeding top and bottom-line expectations. Wells Fargo shares also jumped over 6% after projecting a 1% to 3% increase in net interest income for 2025. Citigroup shares gained 6% after surpassing fourth-quarter estimates.
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, highlighted the positive start to earnings season, emphasizing strong bank earnings as a sign of overall economic health. He suggested the bullish bank results bode well for the broader market. The strong performance across various sectors suggests a positive outlook for the stock market today, reflected in live charts tracking market activity.