Stocks soared to a rousing finish Wednesday, as investors picked through details of a crucial December inflation report that could define the market's direction over the coming weeks.
The Dow Jones Industrial Average surged 703.27 points, or 1.65%, to finish the session at 43,221.55, while the S&P 500 gained 1.83% to close at 5,949.91, and the tech-heavy Nasdaq climbed 2.45% to end the day at 19,511.23.
It was the best day for all three major averages since Nov. 6.
December’s consumer price index showed that core inflation, which excludes food and energy, rose 3.2%, the Bureau of Labor Statistics said, down from the previous month and lower than the 3.3% estimated by economists surveyed by Dow Jones.
“Core Inflation isn’t accelerating and that’s the story,” said Jamie Cox, managing partner for Harris Financial Group. “The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion.”
“What we are seeing is the typical ebb and flow of the data as inflation is being pushed out of the system,” he added.
Updated at 12:06 PM EST
Holding on
Stocks are holding most of their earlier gains, thanks in part to a pullback in Treasury yields and a backslide in the market's benchmark volatility gauge, following the softer-than-expected December inflation report.
The S&P 500 was last marked 79 points, or 1.35% higher while the Nasdaq gained 336 points, or 1.77%.
Benchmark 10-yer Treasury note yields were last seen trading at 4.675%, up 2 basis points from their session lows but around 8 basis points south of their pre-inflation release levels.
The CBOE Group's VIX index, meanwhile, fell 9.7% to $16.90 each, pegging investor bets on daily point swings for the S&P 500 at around 62.2 points over each of the next 30 days.
S&P 500, Nasdaq Composite, DJIA, Russell 2000 all with their best sessions since the day after the election pic.twitter.com/9gd9awjEVc
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) January 15, 2025
Updated at 9:46 AM EST
Opening bell leap
The S&P 500 was marked 89 points, or 1.49% higher in the opening minutes of trading with the Nasdaq rising 353 points, or 1.86%.
The Dow surged 636 points to top the 41,000 point mark, while the midcap Russell 2000 gained 49 points, or 2.22%.
Benchmark 10-year Treasury note yields were last marked 12 basis points lower on the session at 4.655%.
"Today’s CPI may help the Fed feel a little more dovish. It won’t change expectations for a pause later this month, but it should curb some of the talk about the Fed potentially raising rates," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
"Judging by the market’s initial response, investors appeared to feel a sense of relief after a few months of stickier inflation readings," she added.
S&P 500 Opening Bell Heatmap (Jan 15, 2025)$SPY +1.49% 🟩$QQQ +1.56% 🟩$DJI +1.51% 🟩$IWM +2.58% 🟩 pic.twitter.com/cq9gtqE0KX
— Wall St Engine (@wallstengine) January 15, 2025
Updated at 8:40 AM EST
Inflation shock
U.S. inflation ticked higher in December, but core price pressures eased, potentially sparking a relief rally in stocks tied to renewed bets on Federal Reserve rate cuts.
The Commerce Department said its headline Consumer Price Index for December was pegged at an annual rate of 2.9%, accelerating from the 2.7% pace recorded in November and reaching the highest level since early last year.
So-called core inflation, which strips out volatile components like food and energy, eased to an annual rate of 3.2%, just inside Wall Street's 3.3% forecast and to the lowest rate in more three years.
U.S. stocks added to gains following the data release, with futures contracts tied to the S&P 500 suggesting an 82 point opening bell gain and those linked to the Dow Jones Industrial Average priced for a 600 point surge. The tech-focused Nasdaq, meanwhile, is called 355 points higher.
Benchmark 2-year Treasury note yields eased 7 basis points to 4.285% while 10-year notes slipped 5 basis points to 4.702%.
US Dec 2024 CPI: The 0.4% month over month increase in the topline December Consumer Price Index, which resulted in a 2.9% year ago advance was caused by the 2.6% increase in energy prices, 4.4% rise in gasoline costs, 1.2% increase in used autos and trucks. Core inflation… pic.twitter.com/gpJdNxSqqO
— Joseph Brusuelas (@joebrusuelas) January 15, 2025
Updated at 7:49 AM EST
Gold in Goldman
Goldman Sachs shares jumped after topping Wall Street earnings forecasts and following its Wall Street rivals with a surge in dealmaking fees over the three months ending in December.
Goldman posted earnings of $11.95 per share, a 120% increase from the year-ago period that smashed Wall Street's $8.22 forecast. Investment banking and markets fees rose 33% to $8.48 billion.
Goldman shares were marked 2.1% higher in premarket trading to indicate an opening bell price of $583.50 each.
Goldman Sachs $GS crushes Q4 expectations with $13.87B revenue and $11.95 EPS, far above analyst estimates of $12B and $8.21. Asset & wealth management hits record $3.14T AUM with $2.8B in fees (+15% YoY). Investment banking sees strong 24% YoY growth at $2.06B, signaling robust… pic.twitter.com/qmoWD3dRtM
— Steve Dircks (@Charter_Digital) January 15, 2025
Updated at 7:06 AM EST
Bank on it
JP Morgan kicked off the bank earnings season with stronger-than-expected fourth quarter profit as dealmaking help boost the group's bottom line and offset an overall slide in net interest income tied to lower Federal Reserve interest rates.
JP Morgan (JPM) earnings for the three months ended in December were $14 billion, or $4.81 a share, up 58.2% from the year-earlier period and well ahead of the Wall Street consensus forecast of $4.11 per share
Net interest income was $23.5 billion, down 2.9% from the year-ago period but investment banking revenue rose 46% to $2.6 billion.
JP Morgan shares were marked 3.5% higher in premarket trading immediately following the earnings release to indicate an opening bell price of $255.75 each.
Wells Fargo was also on the move after its fourth-quarter update, which showed both better-than-expected overall profit and a 59% surge in dealmaking fees.
Shares in the group were last marked 2.4% higher in premarket at $72.88 each.
Related: JP Morgan earnings kick-off bank reporting season as stock market wobbles
Stock Market Today
Stocks closed modestly higher on Tuesday, with the S&P 500 edging just 6.7 points into the green. A choppy trading day was complicated by uncertainty over President-elect Donald Trump's tariff plans and a producer price inflation reading that included some stubborn price pressures.
Treasury yields were largely unmoved over the session, but eased modestly overnight ahead of today's December inflation report, which is expected to show a pickup in headline pressures while core consumer prices remain largely unchanged.
A hotter-than-expected reading, however, could fan concern that faster inflation will limit the Federal Reserve's ability to lower borrowing rates this year, pushing Treasury yields higher and stiffening the headwind for U.S. stocks.
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
"US equities may now need clear relief from hawkish policy to make a sustained move higher,” said Goldman Sachs strategist Dom Wilson. “We think equities may remain more fragile until we reverse the perception that the Fed put is now struck lower.”
A quartet of big bank earnings is also on today's active slate, with fourth-quarter updates from JPMorgan Chase (JPM) , Citigroup (C) , Wells Fargo (WFC) and Goldman Sachs Group (GS) .
Related: Wall Street debates bond market rout as inflation data looms
LSEG data suggest financial sector earnings will grow 22.7% from the prior-year period and contribute around 17.5% of the collective $519.9 billion forecast for S&P 500 profits over the fourth quarter.
Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest a modest 11 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 100 point bump.
The tech-focused Nasdaq is called 55 points higher with Nvidia (NVDA) , Tesla (TSLA) and Trump Media & Technology (DJT) shares active in premarket trading.
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In overseas markets, a surprise slowdown in U.K. inflation, which was pegged at 2.5% over the month of December, eased some of the recent upward pressure on government bond yields and helped the FTSE 100 jump 0.72% in midday London trading.
The regional Stoxx 600 benchmark rose 0.34% in Frankfurt.
Overnight in Asia, Japan's Nikkei 225 finished modestly in the red, falling 0.07% on the session, while the MSCI ex-Japan benchmark slipped 0.03% lower into the close of trading.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
