Stocks rallied strongly on Wednesday, driven by a lower-than-expected December CPI report and positive bank earnings. The Dow Jones Industrial Average jumped 1.65% to close at 43,221.55. The S&P 500 climbed 1.83% to 5,949.91, and the Nasdaq Composite surged 2.45% to 19,511.23. This marked the best day for all three indexes since November 6th.
December’s CPI report showed core inflation, excluding food and energy, rose 3.2%, slightly below November’s figure and economists’ forecasts. Headline inflation increased 2.9% year-over-year, in line with expectations.
This encouraging inflation data suggests easing inflationary pressures, boosting investor confidence. John Kerschner, portfolio manager at Janus Henderson Investors, noted the market’s positive reaction to consecutive below-forecast inflation readings. He emphasized the CPI’s potential to prevent further interest rate hikes.
The 10-year Treasury yield fell around 13 basis points to 4.65% after the CPI report. Growth stocks like Tesla and Nvidia rallied, with Tesla up around 8% and Nvidia gaining roughly 3%.
The fourth-quarter earnings season started strong, with major banks beating expectations. JPMorgan Chase shares rose nearly 2% after exceeding EPS and revenue projections.
Goldman Sachs shares jumped 6% on a positive earnings surprise. Wells Fargo shares also surged over 6% after projecting a 1% to 3% increase in net interest income for 2025. Citigroup shares gained 6% after beating fourth-quarter earnings estimates.
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, highlighted the strong bank earnings, emphasizing the financial sector’s link to the overall economy. He suggested the banks’ bullish performance is a positive sign for the broader market.