Wall Street rallies on robust bank earnings and positive news on inflation
New York
CNN
—
US stocks rallied Wednesday after an encouraging inflation report and blockbuster profits for some of America's biggest banks.
The Dow rose by 644 points, or 1.52%, the S&P 500 rose 1.48% and the tech-heavy Nasdaq moved higher by 1.79%.
Stocks started the day much higher, surging in premarket trading after the latest inflation data showed a slowdown in the core measure of Consumer Price Index for the first time in months, rising just 0.2% from November and easing to 3.2% year over year after staying stuck at 3.3% since September 2024.
That's an improvement despite headline consumer prices rising 2.9% year-over-year in December, edging up from 2.7% the month before, according to data from the Bureau of Labor Statistics released Wednesday.
"We believe the market will be encouraged by the decrease in core inflation, which should alleviate some of the pressure on stock and bond markets, both of which have had a poor start to the year on inflation fears and concerns the Federal Reserve would not only stop cutting interest rates, but could even reverse course and begin raising them," said Chris Zaccarelli, chief investment officer at Northlight Asset Management, in a note.
Robust bank earnings for the fourth quarter are a positive signal for the wellbeing of the biggest players in US financial markets ahead of President-elect Donald Trump's return to the White House.
JPMorgan Chase posted a record annual profit of $58.5 billion, hauling in $14 billion in net income in the fourth quarter as an environment of lower interest rates and post-election market volatility proved profitable for the bank.
Goldman Sachs also posted strong earnings on Wednesday, recording $4.11 billion in profit in the fourth quarter, more than double its profit in the fourth quarter of 2023.
Citi posted a $2.9 billion profit in the fourth quarter of 2024 compared with a $1.8 billion loss in the fourth quarter of 2023. That was "primarily driven by the higher revenues, lower expenses and lower cost of credit," according to a Citi press release.
CNN's Alicia Wallace and Matt Egan contributed reporting
