US stocks surged Wednesday, fueled a slowdown of core inflation and better than expected earnings from major banks.
The Dow Jones Industrial Average climbed by 804 points or 1.9%. The S&P 500 rose 2%, and the Nasdaq Composite climbed 2.66%.
Investors breathed relief after the Consumer Price Index report for December showed that core inflation, excluding energy and food, had decelerated from 3.3% to 3.2%. This was down from 3.3% in November and below expectations of economists.
John Kerschner of Janus Henderson Investors, who is the head of US securitized product at Janus Henderson, said that the CPI data had removed any concerns about future rate hikes.
As Treasury yields fell, growth stocks like Tesla, Nvidia, and AMD saw solid gains, averaging around 5% each.
Financial sector leads the way with strong earnings season
The fourth-quarter earnings reports began on a positive note, particularly from major banks.
JPMorgan Chase’s shares rose nearly 2% following the release of better-than-expected earnings (EPS) and revenues, mainly due to solid results in fixed-income trading.
Goldman Sachs shares soared 6% following the company’s top- and bottom-line earnings exceeding expectations. Wells Fargo shares jumped 7% as it projected higher net interest income in 2025. Citigroup gained 7% as well after exceeding expectations for the fourth quarter.
“Bank earnings are crucial as the financial industry is closely linked to the broader economic.
Larry Tentarelli is the chief technical strategist of Blue Chip Daily Trend Report. He said that today’s bullish results by major banks indicate positive momentum for a broader market.
Equity investors were relieved by the pullback in yields after the CPI report.
Quantum stocks and the energy sector are on the rise
Microsoft declared 2025 as the year for getting “quantum-ready.”
D-Wave Quantum, Rigetti Computing, and the Defiance Quantum & Artificial Intelligence ETF all grew by 34% and 27% respectively.
This momentum was further fueled by Nvidia’s announcement of an “Quantum Day” event at its GTC conference.
Oil prices also surged to their highest level since August. West Texas Intermediate crude reached $80.04 per barrel, boosting energy stock.
The Energy Select Sector SPDR Fund XLE gained 1.3%, marking the sixth consecutive positive session.
The Federal Reserve’s “Beige Book”, which shows a slight to moderate increase in growth across its districts with consumer spending and vehicle sales picking up, was released on Tuesday.
Construction was slowed by higher costs of materials and financing.
The labor market was mixed, with some districts experiencing a modest increase in hiring as well as moderate wage growth.
UBS warned, despite the positive economic data that stock volatility may persist in the months to come due to uncertainty over rates and possible policy shifts under Donald Trump.
UBS also expects that the Federal Reserve will cut rates by 50 basis point later this year.
Communication services led the S&P 500 sector with a 2.7% increase, while the consumer discretionary, finance, and IT sectors all rose by 2% or higher.
Consumer staples was the only sector to show a decline, a mere 0.04%.
This post US stocks soar after better-than expected inflation data and strong earnings results appeared first on The ICD
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