Stocks surged Wednesday following the release of the Consumer Price Index (CPI) report for December, which indicated a slowdown in core inflation and strong quarterly earnings results from major U.S. banks.
The Dow Jones Industrial Average increased by 703.27 points, a 1.65% rise, closing at 43,221.55. The S&P 500 climbed 1.83% to reach 5,949.91, while the Nasdaq Composite rallied by 2.45% to close at 19,511.23. This marked the most significant single-day gain for all three major averages since November 6th.
According to the Bureau of Labor Statistics, December’s CPI showed a 3.2% increase in core inflation (excluding food and energy), slightly lower than the previous month’s figure and below the 3.3% predicted by economists polled by Dow Jones. Overall inflation rose by 2.9% year-over-year, matching expectations.
John Kerschner, head of U.S. securitized products and portfolio manager at Janus Henderson Investors, noted the market’s positive response to consecutive inflation reports (PPI and CPI) coming in below projections. He emphasized the significance of the CPI data in potentially precluding further interest rate hikes, which some market participants had begun to anticipate.
The 10-year Treasury yield experienced a sharp decline following the CPI report, decreasing by approximately 13 basis points to around 4.65%. Growth stocks, including Tesla and Nvidia, saw substantial gains, rising by around 8% and 3%, respectively, in response to the falling Treasury yields.
The fourth-quarter earnings season began on a positive note, with major banks exceeding expectations. JPMorgan Chase shares rose nearly 2% after the bank reported better-than-expected earnings per share (EPS) and revenue, driven by strong performance in fixed-income trading and investment banking.
Goldman Sachs shares surged 6% following the announcement of exceeding both top and bottom-line expectations in the previous quarter. Wells Fargo shares also jumped over 6% after the bank projected a 1% to 3% increase in net interest income for 2025. Citigroup shares gained 6% after the company surpassed fourth-quarter estimates.
Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, highlighted the positive start to the earnings season, emphasizing the importance of strong bank earnings as an indicator of overall economic health. He suggested that the bullish results from major banks 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.
