US close: Stocks surge as core inflation slows, bank results impress

(Sharecast News) - US stocks surged on Wednesday after a closely watched inflation report showed an easing of underlying price pressures while quarterly results from the banking sector smashed expectations.

Earnings from heavyweights Goldman Sachs, JPMorgan Chase, Wells Fargo and Citigroup were lifting sentiment with share prices of all four banks rising strongly.

The Dow jumped 1.7% to 43,221.55, its highest close since 26 December, while the S&P 500 and Nasdaq gained 1.8% and 2.5% respectively.

According to the Department of Labor, the headline consumer price index for December was 2.9% higher than the year before, with the annual rate of inflation picking up for the third straight month due to a jump in gas prices. This was up from 2.7% in November but in line with economists' forecasts.

However, core annual inflation, which strips out volatile food and energy prices, eased to 3.2% after three straight months at 3.3%, coming in slightly below expectations.

The data follows Tuesday's producer price index for December, which showed that annual wholesale inflation increased less than predicted, to 3.3% from 3.0% the month before.

"Yesterday's PPI data in the US raised the prospect that today's figures wouldn't come in too hot, and while the headline figures were slightly higher, the key core figures delivered the good news," said Chris Beauchamp, chief market analyst at IG.

"Investors can live with a cautious Fed so long as inflation remains contained. Today's news seems to support that thesis, and has seen risk appetite switch firmly back to bullish."

The yield on the benchmark 10-year Treasury note dropped sharply on the back of the report and was sitting roughly 14 basis points lower at 4.655% in afternoon trade.

Elsewhere on the macro front, mortgage applications surged by 33.3% in the week ended 10 January, according to the Mortgage Bankers Association of America, erasing the previous four weekly declines with the sharpest increase seen since 2020.

Finally, the NY Empire State manufacturing index fell to -12.6 in January, down from 2.1 in December, according to the New York Federal Reserve, missing forecasts for an increase to 3 and marking a return to a contraction in manufacturing activity.

Banks impress with earnings

JPMorgan Chase reported Q4 earnings and revenues that came in ahead of expectations, while Wells Fargo said net interest income was set to grow, Goldman Sachs beat on both the top and bottom lines, and Citigroup shares traded higher after coming in better than consensus estimates with its Q4 earnings.

"There's been a lot of talk about American exceptionalism, and it has undoubtedly helped deliver a stonking run for US markets over the past year," said Danni Hewson, head of financial analysis at AJ Bell.

"Questions may abound about how long the run can last and whether Donald Trump's form of isolationism will be a boon or a curse, but as a host of Wall Street banks delivered robust and even record-breaking profits, no one is really thinking about the answers just yet."

Dow Jones - Risers

Goldman Sachs Group Inc. (GS) $605.92 6.02% American Express Co. (AXP) $312.32 3.98% Home Depot Inc. (HD) $406.09 3.39% Intel Corp. (INTC) $19.72 2.71% Microsoft Corp. (MSFT) $426.31 2.56% Walgreens Boots Alliance, Inc. (WBA) $12.53 2.37% Visa Inc. (V) $316.32 2.33% JP Morgan Chase & Co. (JPM) $252.35 1.97% Apple Inc. (AAPL) $237.87 1.97% Travelers Company Inc. (TRV) $240.00 1.29%

Dow Jones - Fallers

Salesforce.Com Inc. (CRM) $321.16 -0.74% Boeing Co. (BA) $166.20 -0.49% Coca-Cola Co. (KO) $61.77 -0.44% Verizon Communications Inc. (VZ) $38.18 -0.26% Nike Inc. (NKE) $71.07 -0.14% Unitedhealth Group Inc. (UNH) $543.42 -0.06% Procter & Gamble Co. (PG) $159.65 -0.06%

S&P 500 - Risers

Bank Of New York Mellon Corp. (BK) $82.05 8.03% Intuitive Surgical Inc. (ISRG) $580.11 7.65% Wells Fargo & Co. (WFC) $75.95 6.69% Citigroup Inc. (C) $78.27 6.49% Goldman Sachs Group Inc. (GS) $605.92 6.02% Micron Technology Inc. (MU) $103.19 5.99% Sempra Energy (SRE) $82.42 5.52% Blackrock Inc. (BLK) $1,011.88 5.19% CBRE Group Inc (CBRE) $131.54 5.12% Edison International (EIX) $61.30 4.91%

S&P 500 - Fallers

United Airlines Holdings Inc (UAL) $104.96 -2.52% AbbVie Inc (ABBV) $171.35 -2.39% Hershey Foods Corp. (HSY) $151.75 -2.29% Brown Forman Corp. Class B (BF.B) $33.72 -2.18% ConAgra Brands Inc (CAG) $25.57 -2.07% Hologic Inc. (HOLX) $68.75 -2.07% Kroger Co. (KR) $58.69 -2.05% Waters Corp. (WAT) $397.83 -1.79% Church Dwight Co Inc. (CHD) $103.46 -1.75% Quest Diagnostics (DGX) $150.39 -1.73%

Nasdaq 100 - Risers

NetEase Inc. Ads (NTES) $103.92 8.22% Tesla Inc (TSLA) $428.22 8.04% Intuitive Surgical Inc. (ISRG) $580.11 7.65% Micron Technology Inc. (MU) $103.19 5.99% Mercadolibre Inc. (MELI) $1,838.15 4.82% Meta Platforms Inc. (META) $617.12 3.85% Synopsys Inc. (SNPS) $507.19 3.43% Seagate Technology Plc (STX) $94.34 3.41% Nvidia Corp. (NVDA) $136.24 3.40% Alphabet Inc. Class A (GOOGL) $195.55 3.11%

Nasdaq 100 - Fallers

Biomarin Pharmaceutical Inc. (BMRN) $61.58 -3.49% Hologic Inc. (HOLX) $68.75 -2.07% Monster Beverage Corp (MNST) $49.24 -1.71% Biogen Inc (BIIB) $141.00 -1.44% Asml Holdings N.V. (ASML) $726.30 -1.36% Hasbro Inc (HAS) $56.16 -0.81% Mondelez International Inc. (MDLZ) $56.64 -0.81% American Airlines Group (AAL) $18.07 -0.77% PACCAR Inc. (PCAR) $109.63 -0.52% Intuit Inc. (INTU) $621.45 -0.38%