By Johan M. Cherian and Sukriti Gupta
(Reuters) – Wall Street's main indexes rose on Wednesday, with the benchmark index reaching a one-week high, driven by lower-than-expected core inflation data for December and strong quarterly earnings for the largest U.S. banks.
At 9:41 a.m. EDT, the index was up 613.51 points, or 1.44%, to 43,131.79, the S&P 500 was up 85.16 points, or 1.46%, to 5,928.07, and the S&P 500 was up 335.07 points, or 1.76%, to 19,379.64. a point.
The index of small, locally focused companies jumped by 2.3%.
A Labor Department report showed that the consumer price index rose in line with expectations in December. However, markets focused on core CPI numbers, which rose 3.2%, below estimates of a 3.3% rise.
Traders were anticipating roughly equal odds that the Fed would cut interest rates twice by the end of 2025, with the first cut coming in June.
The yield on benchmark Treasuries fell from a 14-month high last at 4.64%, helping a 2.2% gain in real estate stocks, which led the advance among the 11 S&P 500 sectors.
Markets also focused on the quarterly earnings of major banks.
JPMorgan Chase & Co (NYSE:) stock rose 0.6% after the lending giant reported record annual profits in the fourth quarter, while… Wells Fargo (NYSE:) rose 4.2% after fourth-quarter earnings beat Street forecasts as a rebound in deal-making activity boosted its investment banking business.
Goldman Sachs shares gained 4.9% after recording its best quarterly profit since the third quarter of 2021, while Citigroup (NYSE:) turned profitable in the fourth quarter, sending its shares up 3.9%.
“It's a confluence of two bullish factors,” said Adam Sarhan, CEO of 50 Park Investments.
“First, you have inflation that is out of control, so it leaves the door open for more easy money from the Fed. Second, you have profits from the big banks, which are going uphill.”
The S&P 500 banks index rose 1.9%, putting it on track for a gain of about 5% in January. The index has outperformed Wall Street's major indexes, which are expected to post modest gains for the month, including Wednesday's advances.
In 2024, the banking index recorded its largest annual jump since 2019 due to expectations that US President-elect Donald Trump's policies, such as tax cuts and loose regulations, could strengthen the financial sector.
Of the 28 companies in the S&P 500 that have reported fourth-quarter earnings so far, 82.1% have beat estimates, according to data compiled by LSEG.
Statements from New York Fed President John Williams and Chicago Fed President Austan Goolsbee will be analyzed later today. The central bank is also scheduled to unveil its beige book on economic activity at 2:00 PM ET.
BlackRock (NYSE:) stock rose 3.9% after its assets reached a record level of $11.6 trillion in the fourth quarter.
Advancing issues outnumbered decliners by 13.19 to 1 on the New York Stock Exchange and by 4.74 to 1 on the Nasdaq.
The S&P 500 recorded 13 new 52-week highs and no new lows, while the Nasdaq Composite recorded 37 new highs and 25 new lows.
