NEW YORK: Wall Street’s main indexes soared on Wednesday, with the benchmark S&P 500 touching a one-week high, driven by lower-than-expected December core inflation data and robust quarterly earnings from major US banks.
At 11:37 a.m. ET, the Dow Jones Industrial Average rose 570.93 points, or 1.34%, to 43,089.21, the S&P 500 gained 80.82 points, or 1.38%, to 5,923.73 and the Nasdaq Composite gained 356.93 points, or 1.87%, to 19,401.33.
The domestically focused small-cap Russell 2000 index jumped 1.6%.
A Labor Department report showed the consumer price index rose in line with expectations in December. Still, markets were focused on the core CPI figure, which advanced 3.2%, lower than estimates of a 3.3% rise.
Traders were pricing in nearly even odds that the US Federal Reserve will cut interest rates twice by the end of 2025, with the first reduction to come in July.
The yield on the benchmark Treasury note dipped from its 14-month high and was last at 4.66%.
Nine of the 11 S&P 500 sectors traded higher, with communication services leading advances with a 2.2% rise. The S&P 500 was poised for its biggest daily jump since November 6.
Investors were relieved by a long-awaited ceasefire deal between Israel and Hamas, paving the way to potentially ending the 15-month-long Gaza war that has upended the Middle East.
Markets were also focused on strong quarterly results from major banks.
JPMorgan Chase & Co climbed 1.4% after the lending giant posted a
record annual profit in the fourth quarter, while Wells Fargo added 6.1% after its fourth-quarter profit beat Street expectations as a rebound in dealmaking activity boosted its investment banking business.
Goldman Sachs gained 4.7% after posting its best quarterly profit
since the third quarter of 2021, while Citigroup swung to a profit in the fourth quarter, sending its shares up 5.6%.
“It’s a confluence of two bullish factors,” said Adam Sarhan, chief executive of 50 Park Investments.
“One, you’ve got inflation that is not out of control, so it leaves the door open for more easy money from the Fed. And two, you have earnings from the big banks, which are coming in so far as being bullish.”
The S&P 500 banks Index rose 2.9%, on track to log gains of about 6% in January. It has outperformed Wall Street’s main indexes, which are poised to notch modest gains for the month, including Wednesday’s advances.
In 2024, the banking index logged its biggest annual jump since 2019 on expectations that US President-elect Donald Trump’s policies, such as tax cuts and loose regulations, could boost the financial sector.
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