Stocks finished higher Wednesday as investors looked to the unofficial start of the first-quarter earnings season to drive momentum for stocks in the face of accelerating inflation pressures.
The Dow Jones Industrial Average finished up 344 points, or 1.01%, to 34,564, while the S&P 500, which is down around 2.9% for the month, rose 1.12%. The tech-focused Nasdaq gained 2.03%.
"Earnings season is here and so far the takeaway is that the short-term outlook for the economy is pretty good and that the consumer is handling widespread price increases," Edward Moya, senior market analyst for the Americas with Oanda. "US stocks are rebounding as the bond market selloff appears to be over for now."
Moya said that Fed rate hike expectations "will get tested in the coming months and many traders are concerned that geopolitical and inflation risks will force them to be less aggressive with monetary tightening later this year."
Stocks were hit in pre-market by a faster-than-expected reading for factory gate inflation, which showed core producer prices rising 9.2% from last year, well ahead of the Street consensus forecast of an 8.5% surge.
JPMorgan Chase (JPM) lead a parade of bank earnings this week with its March quarter profit report prior to the start of trading, with Delta Air Lines (DAL) also providing an early look into the impact of higher fuel prices on the still-recovering airline industry.
JPMorgan actually missed Street forecasts, with a bottom line of $2.63 per share, as it set aside $902 million in reserves against bad loans and credit losses linked to both surging domestic inflation and the Russia's war on Ukraine, taking its shares to a near one-year low and finished down 3.24%.
Delta Air Lines (DAL) shares surged 6.3% after the carrier posted a narrower-than-expected first quarter loss, with a big boost in revenues, thanks to what it called a "strong rebound in travel demand" as the Omicron infection wave faded over the final month of the period.
S&P 500 companies are expected to see collective profits grow 6.1% from last year to a share-weighted total of $432.2 billion, according to Refinitiv data, a pace that would be down sharply from the 32.1% clip recoded over the final three months of last year.
That could provide investors with some weaponry to fight the onslaught of faster inflation -- and the hawkish central banks moves that come with it -- following the fastest annual CPI reading in more than 40 years last month in the United States and the biggest month-on-month change in the U.K. since records began in 1988.
Interest-rate traders are still pricing in three consecutive 50 basis point rate hikes from the Fed following yesterday's CPI data, pushing the dollar index, which tracks the greenback against a basket of six major global currencies, to another fresh two-year high of 100.37 in overnight trading.
Twitter (TWTR) shares were again in focus amid reports that Tesla (TSLA) CEO Elon Musk will face a lawsuit from former shareholders over his stake-building in the social media website and comments from star fund manager Cathie Wood that she's been "cutting back" on her holdings since the departure of former CEO Jack Dorsey.
Shares ended up 3.1%.
Bed, Bath & Beyond (BBBY) shares lost 1.2% after the struggling home retailer posted a surprise holiday quarter loss as supply chain snarls kept inventory stuck in warehouses and shipping ports and blunted overall sales growth.
PayPal Holding (PYPL) shares dropped nearly 3% after the payments company said CFO John Rainey would be leaving the company after seven years to take on the chief financing role at retailing giant Walmart (WMT).
