Stock market today: Dow jumps 700 points, Nasdaq soars 2.5% after cool CPI reading
US stocks ripped higher on Wednesday as high hopes for bank earnings paid off and a crucial consumer inflation update showed key prices increased less than expected in December.
The benchmark S&P 500 (^GSPC) popped more than 1.8%, while the Dow Jones Industrial Average (^DJI) rose more than 1.6%, or over 700 points. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) soared 2.5%.
Stocks took a leg higher after the Consumer Price Index (CPI) showed progress toward the Fed’s 2% inflation target in December.
Prices climbed 0.2% month-on-month on a “core” basis, which strips out the more volatile costs of food and gas, an easing from November’s 0.3% gain. Over last year, core CPI rose 3.2%.
Until the latest print, annual core CPI had been stuck at a 3.3% gain for the past four months. December was the first time since July that the metric reflected a deceleration in price growth.
The 10-year Treasury yield (^TNX) dropped over 13 basis points to trade around 4.65% after the cooler-than-expected reading. It had been up at its highest level in more than a year, serving as a headwind for stocks. The interest-rate-sensitive small-cap Russell 2000 Index (^RUT) soared in reaction, rising almost 2%.
Traders still see just a 3% chance that the Fed lowers rates in January, per the CME FedWatch Tool. They remain split on whether a cut will come in the back half of this year, with odds of easing in June now seen as more likely than not.
