Stocks experienced a significant rise in early trading on Wednesday, maintaining robust performance throughout the day. Following a narrowly mixed closing on Tuesday, all major indexes surged.
The tech-focused Nasdaq delivered an impressive gain, jumping 466.84 points, or 2.5%, to settle at 19,511.23. This came after it concluded the previous session at its lowest closing point in nearly two months. The Dow climbed 703.27 points, or 1.7%, to 43,221.55, while the S&P 500 advanced by 107.00 points, or 1.8%, reaching 5,949.91.
The rally on Wall Street was attributed to a positive reaction towards the Labor Department's closely monitored report on December's consumer price inflation. Although the report indicated a slightly higher-than-expected rise in consumer prices for December, the annual rate of core consumer price increase unexpectedly slowed.
Specifically, the Labor Department revealed that the consumer price index rose by 0.4% in December, following a 0.3% increase in November. Economists had anticipated a continued 0.3% rise. Furthermore, consumer prices' year-over-year growth rate accelerated to 2.9% in December from 2.7% in November, aligning with forecasts.
Conversely, core consumer prices, which exclude food and energy, edged up by 0.2% in December after maintaining a 0.3% increase for four consecutive months. This minor rise matched market expectations. Annually, core consumer price growth decelerated to 3.2% in December from 3.3% in November, contrary to economists' predictions of unchanged growth.
"Core inflation remains stable, which is a positive indicator," commented Jamie Cox, Managing Partner at Harris Financial Group. "Concerns over runaway inflation appear unfounded based on this data."
Further optimism emerged from strong earnings reports from major financial institutions, including JPMorgan Chase (JPM), Goldman Sachs (GS), and Citigroup (C).
Sector Performance
Financial stocks experienced sharp increases following the upbeat earnings announcements, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index rising by 4.1% and 3.1%, respectively.
Interest rate-sensitive housing stocks also demonstrated significant strength, leading to a 2.3% rise in the Philadelphia Housing Sector Index. Additionally, computer hardware, semiconductor, and software sectors showed marked strength, contributing to the Nasdaq's overall brilliance.
Retail, steel, and energy sectors also saw upward movements, aligning with most other major sectors.
International and Other Markets
On the international front, stock markets in the Asia-Pacific region exhibited mixed performance on Wednesday. Japan’s Nikkei 225 Index experienced a slight decline of 0.1%, whereas Hong Kong's Hang Seng Index increased by 0.3%.
European markets, however, moved broadly higher. Germany's DAX Index surged by 1.5%, the U.K.'s FTSE 100 Index increased by 1.2%, and France’s CAC 40 Index rose by 0.7%.
In the bond market, treasuries surged due to the consumer price inflation data. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, dropped by 13.5 basis points to 4.653%.
Forecast for Thursday
Thursday's trading might be influenced by various U.S. economic releases, including reports on weekly jobless claims and retail sales.
In terms of earnings, Bank of America (BAC), Morgan Stanley (MS), and UnitedHealth (UNH) are among the companies slated to announce their quarterly results before the market opens.
The material has been provided by InstaForex Company -
www.instaforex.com
