Stocks rise with all eyes on CPI report

U.S. stocks ascended Wednesday as Wall Street counted right down to the discharge of key consumer price data that’s projected to indicate inflation further easing.

The S&P 500 (^GSPC) rose 1.3%, while the Dow Jones Industrial Average (^DJI) added greater than 250 points, or 0.8%. The technology-heavy Nasdaq Composite (^IXIC) advanced 1.8%.

U.S. Treasury yields pared their move higher from the previous session, with the benchmark 10-year note falling below 3.6%. The U.S. dollar index also retreated.

Wells Fargo (WFC) was amongst firms in focus in early trading after the megabank said late Tuesday it would cut back its home lending business. The move by Wells Fargo, once a number one mortgage lender, comes amid a slowdown within the housing market as sky-high rates of interest put a damper on property purchases and refinancing agreements. The stock price was little modified.

Elsewhere, shares of two retailers getting ready to extinction continued to see intense trading. Shares of Party City (PRTY) plunged 37% after surging around that much earlier within the day and spiking 118% in Tuesday’s session. Bloomberg News reported the corporate has sought funding for a possible Chapter 11 bankruptcy, citing individuals with knowledge of the preparations.

Embattled retailer Bed Bath & Beyond (BBBY) again ripped higher one week after announcing the corporate was considering bankruptcy because of its financial struggles. The meme stock jumped 68% after rising greater than 50% across the prior two sessions.

Coinbase (COIN) shares clawed back to shut up 1.3% after a drop earlier within the day that followed a downgrade by Bank of America to Underperform from Neutral after the corporate said Tuesday it will slash nearly 1,000 jobs as a part of a restructuring plan.

A trader works on the trading floor on the Latest York Stock Exchange (NYSE) in Latest York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

The drumroll is growing louder for December’s Consumer Price Index (CPI) Thursday morning. Economists expect headline CPI rose 6.5% over the prior 12 months last month, Bloomberg consensus estimates show. If realized, the reading would mark one other glide lower from the 7.1% increase seen in November.

The report is prone to sway bets on whether the Federal Reserve will raise rates of interest by 0.25% or 0.50% on the conclusion of its next meeting Feb. 1, while offering hints on how much higher rates are prone to go in subsequent meetings.

The newest economic forecasts from the Fed’s December gathering showed officials project their key overnight lending rate rising to five.1% in 2023.

Several Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Federal Reserve President Raphael Bostic, have asserted this week that rates will likely go somewhere above 5%. And JPMorgan (JPM) CEO Jamie Dimon predicted in an interview with Fox Business Network aired Tuesday that rates could reach 6%.

Nonetheless, DataTrek’s Nicholas Colas points out a “distinctly dovish” tilt in federal funds futures’ expectations because the start if 2023. In line with CME FedWatch Tool, the percentages for rates of 4.75% or higher have fallen an aggregate 13.7 percentage points.

“Markets are roundly and decisively ignoring the Fed’s rate guidance, lower than one month after they published it,” Colas wrote in a note. “As a substitute, futures — and by extension, stock markets — expect the Fed to be setting rates at 12 months end inside 25 – 50 basis points of where they’re today.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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