[US Stocks Surge Higher on Encouraging Inflation Report and Blockbuster Profits from Top Banks
The Dow surged 703 points, or 1.65%, to close at 43,222, while the S&P 500 rose 1.83% and the Nasdaq Composite ended the day higher by 2.45%. The rally marked a strong comeback on Wall Street, with all three major indices recovering losses and posting overall gains since the start of 2025.
The encouraging inflation report and robust bank earnings drove the surge, as data showed a slowdown in the core measure of Consumer Price Index for the first time in months, rising just 0.2% from November and easing to 3.2% year over year. The decline in core inflation alleviated some of the pressure on stock and bond markets, which had been suffering from inflation fears and concerns that the Federal Reserve might soon raise interest rates.
JPMorgan Chase, Goldman Sachs, Citi, Wells Fargo, and BlackRock reported strong fourth-quarter profits, indicating the health and resilience of the largest players in the US financial markets ahead of President-elect Donald Trump’s return to the White House.
The VIX, Wall Street’s fear gauge, fell more than 13% on Wednesday as investors felt relief. Market analysts, such as Chris Zaccarelli and Solita Marcelli, believe the market will continue to be encouraged by the decrease in core inflation and expect the equity bull market to keep going, with the S&P 500 expected to reach 6,600 by the end of the year.
The 10-year Treasury yield edged lower as the bond market digested the improvement in core inflation, highlighting the continued nervousness of some investors about the potential for a rise in inflation. However, a lower yield is welcome news for the stock market, where investors had been worried about rising yields pulling money out of stocks and towards bonds.
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