new york
CNN
—
U.S. stocks rose on Wednesday after an encouraging inflation report and big hits from some of the nation’s biggest banks.
The Dow Jones Industrial Average rose 703 points, or 1.65%, to close at $43,222. The S&P 500 rose 1.83%, and the tech-heavy Nasdaq Composite Index ended the day up 2.45%.
The closing bell capped off a bull run on Wall Street that has helped all three major indexes recover losses and post gains overall since early 2025.
Stocks started the day strong, with the Dow Jones Industrial Average rising about 700 points shortly after the latest inflation numbers were released. Data showed the core consumer price index slowed for the first time in months, rising just 0.2% from November and slowing year-on-year to 3.2% after stagnating at 3.3% since September 2024.
Data released by the Bureau of Labor Statistics on Wednesday showed that headline consumer prices rose 2.9% in December from a year earlier, an improvement despite a slight increase from the previous month’s 2.7%.
“We think the market will be encouraged by lower core inflation, which should relieve some pressure on the stock and bond markets, both of which are driven by inflation concerns and Federal Reserve concerns. “We have had a poor start to the year,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note. “We will not cut rates, but we may reverse course and start raising rates. ” he said.
Wall Street’s fear index, the VIX, fell more than 13% on Wednesday as investors felt a brief sense of relief.
“It could be an uncomfortable journey due to volatility until the S&P 500 reaches its year-end target of 6,600, but we are bullish on stocks,” said Sorita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management. We expect prices to continue.” Watch out for Wednesday.
Strong fourth-quarter bank earnings are a positive signal of the health of major U.S. financial markets ahead of President-elect Donald Trump’s return to the White House.
JPMorgan Chase & Co. (JPM) posted a record annual profit of $58.5 billion, posting a record fourth-quarter net profit as an environment of lower interest rates and post-election market volatility proved beneficial for the bank. amounted to $14 billion.
“Companies are becoming more optimistic about the economy, driven by expectations for more pro-growth policies and improved collaboration between government and business,” JPMorgan Chase CEO Jamie Dimon said in a statement. said.
Goldman Sachs (GS) also reported strong results on Wednesday, posting a fourth-quarter profit of $4.11 billion, more than double its 2023 fourth-quarter profit.
Citi (C) posted a profit of $2.9 billion in the fourth quarter of 2024, compared to a loss of $1.8 billion in the fourth quarter of 2023. According to one report, this is “primarily due to increased revenue, lower expenses and lower credit costs.” press release. Citigroup stock rose about 6.49%.
Wells Fargo (WFC) shares rose 6.69% on Wednesday after the company beat expectations, posting a profit of $5.1 billion in the fourth quarter of 2024, up from $3.4 billion a year earlier.
Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, said in an email that “our top picks for stocks in 2025 are M&A and AI-related. “Both IPOs are likely to be a boom because long investment banks.”
BlackRock (BLK), the world’s largest asset manager, announced fourth-quarter profits of $1.67 billion, up 21% from a year ago. BlackRock’s assets under management in 2024 will reach a record high of $11.55 trillion, an increase of 15% from the previous year. BlackRock stock rose 5.19% on Wednesday.
The 10-year Treasury yield edged lower as bond markets digested improvements in core inflation, highlighting how nervous some investors are about the possibility of higher inflation.
The drop in yields is welcome news for the stock market, where investors have recently worried that rising yields will push money out of stocks and into bonds.
“Further decline in yields would be a constructive tailwind for stocks and the S&P 500,” Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, said in a note.
Joe Brusuelas, chief economist at RSM US, said he thinks bond and stock markets may be less responsive. “This is not a good number,” Bruelas said of the inflation report. “Bond markets are very volatile right now. And they tend to overreact.”
Friday’s explosive jobs report led Wall Street to adjust its expectations for fewer Fed rate cuts in 2025 than previously expected. However, there is no consensus across the major banks.
Michael Gapen, chief U.S. economist at Morgan Stanley, said in a note Wednesday that he believes Wednesday’s inflation report is consistent with the Fed’s March interest rate cut.
“The slowdown in inflation should give the Fed even more confidence that the recent acceleration is just a flash in the pan,” Gapen said.
Meanwhile, Bank of America Global Research maintains its view that the Fed is done cutting interest rates.
“Today’s CPI results reduce the risk of an imminent rate hike…but the Fed’s rate-cutting cycle remains “It doesn’t change our view that it’s over.”
UBS’s Marcelli said in a note on Wednesday that a rate cut by the Fed is “still on the table” as he expects inflation to remain moderate.
Brent crude prices, the global oil benchmark, rose more than 3% to more than $82 a barrel, the highest since August 2024. U.S. benchmark WTI crude oil futures rose about 3.65%, at one point exceeding $80 a barrel. First time since August. Crude oil prices have increased significantly since the end of 2024, and this increase could cause gasoline prices to rise significantly and raise concerns about inflation.
Late last week, President Joe Biden imposed the toughest sanctions yet on Russia’s oil industry, increasing upward pressure on energy prices.
Bank of America (BAC) and Morgan Stanley (MS) are scheduled to release their quarterly results on Thursday.
