Wall Street gains as inflation data supports Fed bets

A trader watches his chart as he works on the floor of the New York Stock Exchange on July 8, 2014. REUTERS/Brendan McDermid

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  • Inflation jumps to its highest level in 40 years
  • Big Tech Extends Gains
  • Dow Jones rose 0.02%, Standard & Poor’s 0.26%, Nasdaq 0.39%

(Reuters) – U.S. stock indexes rose on Wednesday after inflation data largely matched rising expectations, easing some concerns that the Federal Reserve may withdraw support, as shares of technology giants provided the biggest boost.

Data from the Department of Labor showed that the Consumer Price Index (CPI) rose 0.5% last month after rising 0.8% in November, while the consumer price index in the 12 months through December rose 7.0%, recording the highest year-on-year rise in nearly four . contracts. Read more

Economists polled by Reuters had expected the CPI to gain 0.4% in December and 7.0% on an annual basis.

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“Investors were bracing for much hotter inflation than we had already seen. As bad as the number was and like inflationary pressure in the economy, there was little comfort in that,” said Anthony Saglimpin, global market strategist for Ameriprise Financial in Troy. , Michigan.

“Today’s inflation report validates the Fed’s trajectory and means they don’t have to be more aggressive than what has already been priced in.”

The central bank’s plan to ease easing to fight inflation includes raising interest rates, which analysts expect to start as soon as March, as well as scaling back its bond-buying program and reducing its asset holdings. Read more

By 2:23 PM ET, the Dow Jones Industrial Average (.DJI) rose 7.95 points, or 0.02%, to 36,259.97, the S&P 500 (.SPX) increased 12.21 points, or 0.26%, to 4,725.28 and the Nasdaq Composite (.IXIC) ). ) added 59.02 points, or 0.39%, to 15,212.47 points.

Eight of the 11 benchmark S&P 500 sector indicators rose, with materials (.SPLRCM), consumer appreciation (.SPLRCD) and technology (.SPLRCT) leading the percentage gain.

Growth and technology stocks, hurt by rising Treasury yields and hawkish comments from the Federal Reserve, have seen a comeback this week, as investors monitor a variety of metrics to determine whether to buy the rally or prepare for further declines.

Also on this week’s watch list is the unofficial start of the fourth quarter earnings season.

JPMorgan Chase & Co (JPM.N), Citigroup Inc (CN) and Morgan Stanley (MS.N) will report their results on Friday, followed by Bank of America Corp (BAC.N) on Jan. 19.

“Earnings may exceed expectations and this is keeping investors active despite knowing the Fed will start tightening in the next several months,” said Eric Schaefer, CEO of California-based private equity firm Patriarch Oregon.

“You’ll also see less commentary on earnings calls indicating supply chain limitations this season.”

However, in sectors such as air travel, the emergence of the coronavirus Omicron variant could dampen earnings expectations, with analysts at Bank of America (BAC.N) believing the pandemic’s impact on corporate travel is the biggest risk to the airline industry. Read more

The health care index (.SPXHC), the biggest percentage loser in the S&P index, was affected by shares of Eli Lilly (LLY.N), which fell 3.7%, and Biogen (BIIB.O), which fell 7%.

The US government’s Medicare program said that while it plans to cover Biogen’s Aduhelm Alzheimer’s treatment, it will require patients to be enrolled in a clinical trial, limiting access to the drug. This may also affect Eli Lilly, which is developing similar drugs. Read more

Advance issues outnumbered declining issues on the New York Stock Exchange by 1.19 to 1; On the Nasdaq, the ratio was 1.25 to 1 in favor of declining stocks.

The S&P 500 hit 38 new 52-week highs and one new low. The Nasdaq Composite recorded 54 new highs and 108 new lows.

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Inflation has reached its highest level since 1982

(Reporting by Bansari Mayor Kamdar, Shreyachi Sanyal and Anisha Sircar in Bengaluru and Sinad Karo in New York; Editing by Maju Samuel and Aurora Ellis

Our Standards: Thomson Reuters Trust Principles.


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