Markets celebrate cool CPI and bank earnings

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Traders work on the floor of the New York Stock Exchange on January 15, 2025 in New York City.

David D. Delgado | Getty Images

This report is from today’s CNBC Daily Open from Global Markets. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Did you see it? You can register over here.

What you need to know today

Core CPI below estimates
The U.S. consumer price index rose on a seasonally adjusted basis. 0.4% in December, putting the 12-month inflation rate at 2.9%, according to the US Bureau of Labor Statistics. reported Wednesday. Core inflation, which excludes food and energy prices, rose 0.2 percent month-on-month and 3.2 percent year-on-year. The annual reading was down 0.1 percent from November. Both headline readings were 0.1 percentage points below expectations.

Ceasefire agreement between Israel and Hamas
Israel and Hamas have reached a cease-fire and cease-fire agreement to end the 15-month war in the Gaza Strip. Israel’s security cabinet still needs to vote on the deal before it goes into effect. If approved, the first phase of the deal would include a complete ceasefire and the withdrawal of Israeli forces from the heavily populated areas of Gaza, US President Joe Biden said.

Markets are enjoying their best day in months
US stocks emerged on Wednesday for their best day since November as inflation and Treasury yields eased more than expected. Pan-European Stoxx 600 index It added 1.33%, snapping a three-day losing streak and posting its best performance since August. UK government bond yields fell sharply, according to official data.

JPMorgan Chase raised past earnings estimates.
JPMorgan Chase It posted higher earnings for the fourth quarter. During this period, the bank’s profits increased by 50% to 14 billion dollars; Revenue rose 10 percent to $43.74 billion. That’s thanks to net interest income of $23.47 billion, beating StreetAccount’s estimate by nearly $400 million. JPMorgan executives said the bank would increase share buybacks after CEO Jamie Dimon called the stock expensive in May.

Goldman Sachs profits will roughly double
Goldman Sachs Fourth-quarter earnings beat estimates of stronger-than-expected business revenue. The bank said its profit doubled from a year ago to $4.11 billion and revenue rose 23 percent to $13.87 billion. “There has been a meaningful shift in CEO confidence, particularly following the US election results,” CEO David Solomon said on a conference call Wednesday.

(PRO) Earnings to be careful about next week
About 7% of companies in the S&P 500 index are set to report earnings next week. CNBC Pro found six firms that have revised earnings estimates over the past three months, looking for where analysts will grow when the companies report earnings next week.

Bottom line

Finally, a streak of good news for the bulls, after the markets posted weekly losses on the year due to bad inflation.

Top of Page: US inflation was below expectations in December. To be sure, inflation for the month was 0.1 percent higher than the Dow Jones consensus estimate.

But the U.S. Federal Reserve pays more attention to core inflation because it removes fluctuating energy and food price changes and more accurately reflects price changes across the economy. And core inflation was cooler than expected on a monthly and annual basis.

Indeed, according to CNBC’s Jeff Cox “Most of the movement in the CPI came from a 2.6% month-over-month increase in energy prices, driven by a 4.4% increase in gasoline prices, which accounted for 40% of the index’s gain, the BLS said.”

“Today’s CPI number takes additional rate hikes off the table, which some market participants had started to raise prematurely,” said John Kershner, head of US securitized products and portfolio manager at Janus Henderson Investors.

of US 10-year Treasury yield It fell sharply and is now 4.655%, compared to last Friday’s 4.774%, traders moderated interest rate expectations.

That gave stocks some breathing room. of S&P 500 It jumped 1.83%, the Dow Jones Industrial Average It rose 1.65% Nasdaq Composite It reached 2.45%. It was the best day since November 6 for all three major midfielders.

Good earnings reports from banks also added to the cheer. Their financial performance is often used as a predictor of the overall direction of the economy: banks’ bottom lines grow as businesses and consumers become more financially active, which helps to grow the economy.

For investors, the stars aligned on Wednesday. But just as the sky is ever-changing, volatility, in the form of incoming US administrations and policies, remains.

— CNBC’s Jeff Cox, Hakyung Kim and Lisa Kailai Han contributed to this report.

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