The S&P 500 Closed Sharply Higher on Wednesday
The S&P 500 closed higher on Wednesday, driven by cooling inflation and strong quarterly earnings from Wall Street banks. The index gained 703 points, or 1.7%, to close at 4:00 p.m. ET. The Dow Jones Industrial Average added 1.8%, and the Nasdaq Composite climbed 2.5%.
The Bureau of Labor Statistics reported that the headline consumer price index increased by 0.4% month-on-month in December, slightly faster than a pace of 0.3% in the prior month. However, the core CPI, which strips out volatile components like fuel and food, rose 0.2% on a monthly basis and 3.2% year-on-year, below expectations.
Despite the unexpected cooling of inflation, some on Wall Street continue to see risks for inflation and reiterate expectations for just one cut this year. Macquarie, a financial services firm, noted that its baseline remains for just one further 25 bps cut from the Federal Reserve, with the most likely timing being March or May.
Major banks, including JPMorgan Chase, Goldman Sachs, Wells Fargo, and BlackRock, impressed with their latest quarterly returns, offering a boost to the waning post-election stock market rally. JPMorgan Chase’s stock rose 2% after the investment banking giant posted record annual profit, while Goldman Sachs’ stock soared 6% after its profit more than doubled in the fourth quarter.
In other news, Beacon Roofing Supply Inc rose more than 7% after the building products distributor said QXO had made an offer to buy the company for $11 billion. President Joe Biden also confirmed that Israel and Hamas reached a ceasefire and hostage deal to end 15 months of war on the Gaza strip.