Wall Street posted strong gains on Wednesday, driven by consumer inflation data that aligned with expectations and better-than-anticipated quarterly earnings from major banks.
The Dow Jones Industrial Average, which tracks 30 leading companies, climbed 1.65%, closing at 43,221.55 points. The S&P 500, reflecting the largest companies by market capitalization, rose 1.83% to finish at 5,949.91 points, while the Nasdaq Composite surged 2.45%, settling at 19,511.23 points.
Inflation Data and Fed Expectations
The US Consumer Price Index (CPI) increased by 0.4% in December, following a 0.3% rise in November, as reported by the Department of Labor. On an annual basis, inflation stood at 2.9%, up from 2.7% in November. The data reignited market optimism that the Federal Reserve may adopt a more dovish stance in its interest rate policies this year, despite earlier concerns about economic strength in the service sector and labor market.
Strong Bank Earnings Drive Investor Confidence
In addition to inflation data, stronger-than-expected earnings from major banks in Q4 2024 provided a further boost. Stocks such as Goldman Sachs (+6.02%), Wells Fargo (+6.69%), Citigroup (+6.49%), and JP Morgan (+1.97%) saw significant gains, fueling investor optimism.
Among sectors, consumer staples was the only sector to close lower, dropping 0.09%, while consumer discretionary (+3.02%) and communication services (+2.66%) led the gains. Notable winners in the Dow Jones included American Express (+3.98%) and Nvidia (+3.4%).
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