On Wednesday, stock markets experienced a significant surge, with the major indices displaying notable upward trends following a previous session that ended with marginal changes. The Nasdaq, in particular, has recorded a remarkable increase after closing on Tuesday at its lowest point in nearly two months.
Currently, even though off their session highs, the major indexes remain robustly positive. The Nasdaq has risen by 408.33 points, or 2.1%, reaching 19,452.73; the S&P 500 has climbed by 90.43 points, or 1.6%, to 5,933.34; and the Dow has ascended by 592.38 points, or 1.4%, to 43,110.66.
The upturn on Wall Street is largely attributed to the Labor Department's much-anticipated report on December's consumer price inflation. Although the report indicated a slightly higher than expected rise in consumer prices for December, it also revealed an unexpected slowdown in the annual rate of core consumer price growth.
According to the Labor Department, the consumer price index increased by 0.4% in December, following a 0.3% rise in November. Economists had projected a continuation of the 0.3% increase. The report further noted that the annual growth rate of consumer prices accelerated to 2.9% in December, up from 2.7% in November, aligning with economist forecasts.
Conversely, core consumer prices—excluding food and energy—crept up by 0.2% in December after four consecutive months of 0.3% increases, which was in line with expectations. The annual growth rate of core consumer prices decelerated to 3.2% in December from 3.3% in November, contrary to expectations of unchanged growth.
"Core Inflation isn't accelerating, and that's the story," commented Jamie Cox, Managing Partner at Harris Financial Group. "The market may have been overly concerned about rampant inflation, but the data doesn’t support that view."
The market sentiment was further buoyed by positive earnings reports from major financial institutions like JPMorgan Chase (JPM), Goldman Sachs (GS), and Citigroup (C).
Sector Highlights:
Financial stocks have soared in response to the favorable earnings announcements, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index jumping by 3.3% and 2.6%, respectively.
Additionally, interest-rate-sensitive housing stocks have displayed considerable strength, pushing the Philadelphia Housing Sector Index up by 2.6%.
The tech-heavy Nasdaq's substantial rise is partly due to significant advances in computer hardware, semiconductor, and software stocks. Similarly, utilities and telecom stocks, also sensitive to interest rates, have mirrored this upward trend along with most major sectors.
Global Market Overview:
In Asian markets, trading outcomes were mixed; Japan’s Nikkei 225 Index dipped by 0.1%, while Hong Kong’s Hang Seng Index grew by 0.3%.
Conversely, European markets have all demonstrated positivity. Germany's DAX Index increased by 1.6%, the U.K.'s FTSE 100 Index advanced by 1.1%, and France's CAC 40 Index rose by 1.0%.
Bond Market Update:
In the bond market, treasuries have moved sharply higher in response to the consumer price inflation figures. Consequently, the yield on the benchmark ten-year note, which inversely correlates to its price, has decreased by 13.5 basis points to 4.653%.
The material has been provided by InstaForex Company -
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