U.S. stocks rose on Wednesday as Wall Street counted down to the release of key consumer price data expected to show a further slowdown in inflation.
The S&P 500 (^GSPC) rose 1.3%, while the Dow Jones Industrial Average (^DJI) added more than 250 points, or 0.8%. The tech-heavy Nasdaq Composite (^IXIC) advanced 1.8%.
U.S. Treasury yields pared their gains from the previous session, with the benchmark 10-year note falling below 3.6%. The US dollar index also fell.
Wells Fargo ( WFC ) was among the companies in focus in early trading after the megabank said late Tuesday that it would scale back its home loan business. The move by Wells Fargo, once a leading mortgage lender, comes amid a slowdown in the housing market as extremely high interest rates hamper property purchases and refinancing agreements. The share price was little changed.
Elsewhere, shares of two retailers on the brink of extinction continued to trade heavily. Shares of Party City ( PRTY ) fell 37% after jumping around that much earlier in the day and jumped 118% in Tuesday’s session. Bloomberg News reported that the company has sought financing for a potential Chapter 11 bankruptcy, citing people familiar with the preparations.
Struggling retailer Bed Bath & Beyond ( BBBY ) rose again a week after it said the company is considering bankruptcy due to its financial woes. Shares of the meme jumped 68% after rising more than 50% in the previous two sessions.
Shares of Coinbase ( COIN ) bounced back to close up 1.3% after falling earlier in the day, which followed Bank of America’s downgrade to underperform from neutral after the company said on Tuesday that will cut nearly 1,000 jobs as part of a restructuring plan.
A trader works on the trading floor of the New York Stock Exchange (NYSE) in New York, U.S., January 5, 2023. REUTERS/Andrew Kelly
The drums are getting louder for December’s Consumer Price Index (CPI) on Thursday morning. Economists expected core CPI to rise 6.5 percent from a year earlier last month, Bloomberg consensus estimates showed. If realized, the reading would mark another slide down from the 7.1% increase seen in November.
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The report is likely to influence bets on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% at the end of its next meeting on February 1, while offering hints about how much higher interest rates are likely to be in the coming months. meetings.
The latest economic projections from the Fed’s December meeting showed staff projecting their key overnight lending rate to rise to 5.1% in 2023.
Several Federal Reserve officials, including San Francisco Federal Reserve President Mary Daley and Atlanta Federal Reserve President Raphael Bostick, said this week that rates are likely to go above 5%. And JPMorgan ( JPM ) CEO Jamie Dimon predicted in an interview with Fox Business Network that aired Tuesday that rates could reach 6%.
However, DataTrek’s Nicholas Collas pointed to a “distinctly dovish” tilt in expectations for federal funds futures since early 2023. According to the CME FedWatch Tool, rates for rates of 4.75% or higher have fallen a total of 13.7 percentage points.
“Markets are flatly and decisively ignoring the Fed’s interest rate guidance less than a month after it was released,” Colas wrote in a note. “Instead, futures — and by extension, stock markets — expect the Fed to set interest rates at the end of the year within 25-50 basis points of today’s.”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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