Overnight – Stocks rally on softer inflation prints
Stocks surged on Wednesday after December’s consumer price index (CPI) report showed core inflation unexpectedly eased, while major U.S. banks posted robust quarterly earnings.
The Dow Jones Industrial Average jumped 703.27 points (1.65%) to 43,221.55, the S&P 500 rose 1.83% to 5,949.91, and the Nasdaq Composite climbed 2.45% to 19,511.23—the best session for all three indices since November 6.
Core inflation, excluding food and energy, increased 3.2% year-over-year, slightly below the 3.3% forecast. Headline inflation aligned with expectations at 2.9%, according to the Bureau of Labor Statistics. The softer inflation data eased concerns about additional rate hikes, with the 10-year Treasury yield dropping 13 basis points to 4.65%.
Growth stocks like Tesla and Nvidia surged 8% and 3%, respectively, as falling yields boosted sentiment. Meanwhile, JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup all outperformed expectations, driving financial stocks higher.
The ASX has held up much better than the US in recent weeks and that relative outperformance should continue today, so look for the large caps that took a beating to lead from the front today