Stock market today: Dow, S&P 500, Nasdaq soar as inflation cools, bank earnings shine
US stocks rallied on Wednesday as high hopes for bank earnings paid off and a crucial consumer inflation update
showed
prices increased less than expected in December.
The benchmark S&P 500 (
^GSPC
) popped more than 1.6% while the Dow Jones Industrial Average (
^DJI
) rose more than 1.5%. Meanwhile, the tech-heavy Nasdaq Composite (
^IXIC
) soared 2.2%.
Stocks took a leg higher after the Consumer Price Index (CPI)
showed progress
toward the Fed’s 2% inflation target in December.
Prices climbed 0.2% month-on-month on a “core” basis, which strips out the more volatile costs of food and gas, an easing from November’s 0.3% gain. Over last year, core CPI rose 3.2%.
Until the latest print, annual core CPI had been stuck at a 3.3% gain for the four months. December was the first time since July that the metric reflected a deceleration in price growth.
The 10-year Treasury yield (
^TNX
) dropped over 14 basis points to trade around 4.64% after the cooler-than-expected reading. It had been
up at its highest level in more than a year, serving as a headwind for stocks
. The interest rate sensitive small-cap Russell 2000 Index (
^RUT
) soared in reaction, rising 2.3%.
Traders still see just a 3% chance that the Fed lowers rates in January,
per the CME FedWatch Tool
. They
remain split on whether a cut will come in the back half of this year,
with odds of easing in June now seen as more likely than not.
Read more:
What a Fed rate cut means for bank accounts, CDs, loans, and credit cards
Spirits also got a boost from Wall Street bank earnings reports, which brought surging profits thanks to a dealmaking revival and investment banking strength. JPMorgan Chase (
JPM
) delivered on
optimistic analyst expectations
with a
second straight year of record profit
, while Goldman Sachs (
GS
)
profit beat estimates
. BlackRock (
BLK
),
Wells Fargo
(
WFC
) and
BNY
(
BK
) also booked bumper quarters.
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