Investing.com — U.S. stocks rose sharply on Wednesday after the release of lower-than-expected core consumer inflation, raising the potential for easier monetary policy this year.
At 08:40 ET (13:40 GMT), the index gained 705 points, or 1.7%, the index rose 98 points, or 1.7%, and climbed 380 points, or 1.7%.
December CPI colder than expected
Sentiment rose on Wednesday after data showed the main consumer price index rose 0.4% month-on-month in December, slightly faster than the 0.3% pace in the previous month. Compared to a year earlier, the CPI rose by 2.9%, compared to 2.7% in November.
However, the surprise came with the so-called “” figure, which removes volatile components like fuel and food. This rose by 0.2% month-on-month and 3.2% year-on-year, below expectations of 0.3% and 3.3% respectively.
At the start of the report, concerns were raised about nagging inflation, particularly after last week’s employment data. President-elect Donald Trump’s plans to impose stiff tariffs on allies and adversaries have also fueled concerns about price pressures.
Markets are bracing for a much slower pace of interest rate cuts in 2025, with the Federal Reserve predicting just two rate cuts — a trend that could bode poorly for risk assets.
Prior to this announcement, there were fears that the Fed might actually be forced by sticky inflation to raise rates this year.
Major banks impress with quarterly results
In the corporate sector, a number of big banks impressed with their latest quarterly returns on Wednesday, giving a boost to the faltering post-election stock market rally.
Shares of JPMorgan Chase (NYSE: ) rose 0.5% after the investment banking giant posted a record annual profit as its brokers and dealers reaped a windfall from the market’s recovery in the fourth quarter.
Shares of Goldman Sachs (NYSE: ) jumped 5.5% after the investment bank’s profit more than doubled in the fourth quarter, boosted by strong reading results.
Wells Fargo (NYSE: ) shares rose more than 5% after the lender reported better-than-expected fourth-quarter results, boosted by stronger investment banking earnings.
Crude oil rose as U.S. inventories fell
Oil prices rose on Wednesday, helped by tepid U.S. inflation data as well as a drop in U.S. crude inventories.
By 09:50 ET, U.S. crude futures (WTI) were up 1.5% at $77.50 a barrel, while the Brent contract added 1.1% at $80.83 a barrel.
Prices fell on Tuesday after the US Energy Information Administration predicted oil would come under pressure over the next two years as supply outstrips demand.
Still, the market found some support in a report late Tuesday that showed a decline in crude oil inventories in the US, the world’s biggest oil consumer.
Traders also remain focused on Russian oil sanctions, amid uncertainty over how much Russian supply will be lost to the global market and whether alternative measures can make up the shortfall.
(Ambar Warrick contributed to this article.)
