Financials led the sector motion on Wednesday as surge in investment banking and trading revenues helped drive well received results for multiple big banks including JPMorgan (JPM) Goldman Sachs (GS), Citigroup (C), and Wells Fargo (WFC).

Read more about their results here.

Amid a large stock rally on Wednesday, large cap tech continues to be a transparent leader.

All seven of the so-called “Magnificent Seven” tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — were up greater than 1.5% or higher.

The Roundhill Magnificent Seven ETF (MAGS) is up greater than 3.5%, far outpacing the gains within the three major averages.

A big drop within the 10-year Treasury yield (^TNX) right down to 4.65% has sparked renewed interest in risk assets on Wednesday.

But as we have been highlighting, the 10-year’s recent surge higher has been driven by a large number of reasons, not only expectations of upper inflation. And one positive Consumer Price Index report doesn’t give the all clear on the recent higher rate headwind for stocks, Wellington Management fixed income portfolio manager Brij Khurana told Yahoo Finance.

Khurana said it’s “still too early” to call a peak in bond yields in the meanwhile, adding that if the brand new Trump administration brings more fiscal spending than anticipated, yields could start one other move higher.

Still, Khurana described Wednesday’s market motion as a “a welcome reprieve for the bond market.”

“There are two-way risks to bond yields,” Khurana said. “It is not just a method.”

Wednesday’s better-than-expected inflation reading showed one particularly promising sign for the Federal Reserve.

The shelter index saw prices increase 4.6% in comparison with the 12 months prior, the bottom level since January 2022. While the index still stays elevated, one among the sticker parts of the inflation story over the past several years continues to indicate the progress Federal Reserve chair Jerome Powell has discussed in recent press conferences.

“With housing services inflation, which is one which we’ve really frightened about, it really has come down now quite steadily, at a slower pace than we thought … nevertheless it’s nonetheless steadily coming down,” Powell said on Dec. 18.

The extra progress in sticky areas of inflation like housing is why some economists imagine rate of interest cuts remain on the table in 2025.

“The slowdown of the past few months is precisely what [Powell] was talking about, and may give the FOMC more confidence that they’ll proceed to chop rates this 12 months, even in the event that they pause within the short-term,” Jefferies US economist Thomas Simons wrote in a note to clients on Wednesday.

Read more on shelter inflation here.

Bitcoin (BTC-USD) spiked after Wednesday’s morning soft inflation reading, to achieve just shy of $99,000.

The world’s largest cryptocurrency following the moves of the broader market has been an emerging trend in recent weeks.

Read more on what’s recently been driving bitcoin prices from Yahoo Finance’s Ethan Wolff-Mann here.

A reshuffling at JPMorgan (JPM) on Tuesday rose questions about when CEO Jamie Dimon will step down.

The bank’s leader said Wednesday it likely won’t be anytime soon.

Yahoo Finance’s David Hollerith reports:

Jamie Dimon agreed Wednesday with an analyst’s assessment that his “base case” for stepping down as JPMorgan Chase (JPM) CEO is a couple of years from now.

The brand new comments on succession got here sooner or later after the nation’s largest bank announced a management reshuffling that raised recent questions on the race to succeed the 68-year-old Dimon, the longest-serving big bank CEO.

Read more here.

Oil prices jumped on Wednesday as US crude inventories fell for an eighth straight week.

West Texas Intermediate (CL=F) popped greater than 2.5% to trade around $79.50 per barrel while Brent (BZ=F), the international benchmark, spiked 2% to hover above $81.

Oil rallied as US inventories fell by 1.96 million barrels last week to their lowest level since April, in accordance with the newest Energy Information Administration data released on Wednesday. Meanwhile gasoline stockpiles hit their highest level in a 12 months.

Crude has been on the rise recently after the US announced broad-based sanctions against oil producer Russia in an effort to chop off Moscow’s revenue amid the continuing war in Ukraine.

Last Friday, a hotter-than-expected December jobs report spooked the market and introduced a discussion concerning the Federal Reserve not cutting rates of interest in any respect or possibly mountaineering rates of interest in some unspecified time in the future.

Largely, economists argued the roles print intensified the concentrate on whether inflation will start to indicate the signs of softening that would prompt the Fed to chop rates of interest in 2025. Early evidence of that trend got here through in Wednesday’s Consumer Price Index (CPI) release.

On a “core” basis, which strips out the more volatile costs of food and gas, prices rose 3.2% compared with the previous 12 months. This marked the primary move lower in core CPI since July.

While economists do not believe this data will push the Federal Reserve to chop rates of interest at its January meeting, several do see a path for rate cuts later in 2025.

Citi economist Veronica Clark wrote in a note to clients on Wednesday that markets have “overestimated the stickiness of inflation.”

“Details of December data must also be encouraging for further [Fed] easing, with many components largely as expected and consistent with pre-pandemic norms,” Clark wrote.

“Weaker inflation should give the Fed more confidence that recent acceleration was only a bump,” Morgan Stanley chief US economist Michael Gapen wrote. “This print is consistent with our call for a rate cut in March.”

JPMorgan (JPM) shares traded just above the flat line on Wednesday despite a big profit boost for America’s largest bank.

Yahoo Finance’s David Hollerith reports:

Last 12 months JPMorgan Chase (JPM) churned out more profits than it ever has before, earning $14 billion in the ultimate quarter of 2024.

Its full-year profits rose to $58 billion, an all-time record for JPMorgan and probably the most ever within the history of American banking. Its fourth quarter profits were up 50% from the year-earlier period.

That results were buoyed by a surge in JPMorgan’s Wall Street operations as dealmaking makes a comeback across the industry following a two-year drought. JPMorgan’s investment banking revenue was up 49% from a 12 months earlier.

Read more here.

A broad-based rally in stocks took hold on the open of Wednesday’s trading session on Wall Street.

All 11 sectors were within the green with interest-rate-sensitive sectors similar to Real Estate (XLRE) and Utilities (XLU) leading the charge. Five sectors were outperforming the S&P 500’s (^GSPC) 1.3% gain.

A recent headwind for stocks died away on Wednesday morning.

The ten-year Treasury yield (^TNX), which had been up at its highest level in greater than a 12 months, dropped greater than 12 basis points to 4.66% following a cooler-than-expected consumer inflation reading.

Meanwhile, stocks rallied, with futures tied to the most important averages all rising 1.5% or more.

Fresh consumer inflation data out Wednesday showed prices increased lower than expected in December.

The Consumer Price Index data from the Bureau of Labor Statistics showed that on a “core” basis — which strips out the more volatile costs of food and gas — prices increased 0.2% month-on-month. That was lower than the 0.3% economists had expected.

On a yearly basis, core prices increased 3.2%, below the three.3% economists had projected. It was the primary move lower within the metric since July.

The headline CPI increased 2.9% over the prior 12 months in December, an uptick from the two.7% seen in November but consistent with economists’ expectations. The index rose 0.4% over the previous month, topping the 0.2% increase seen in November and likewise on par with economists’ estimates.

Yours truly is on the brink of head out for one more week of impactful reporting on the World Economic Forum in Davos, Switzerland — which kicks off next Monday. I can have more to say on what we might be doing there on this Sunday’s Morning Temporary newsletter.

I’ll quickly note that a source aware of the matter tells me President Trump might be speaking by video feed on Thursday, just days after his inauguration (and maybe a flurry of executive orders).

But ahead of that fun, I assumed WEF’s annual global risk report that dropped this morning is an interesting read. The highest risk is “state-based armed conflict.” Other top risks include misinformation and disinformation (good to see Zuck now not fact-checking at Meta…), extreme weather events, societal polarization, cyber-espionage and warfare.

Considering a variety of these risks aren’t priced into Mag 7 stocks!

“Rising geopolitical tensions and a fracturing of trust are driving the worldwide risk landscape” said WEF managing director Mirek Dušek in a press release. “On this complex and dynamic context, leaders have a alternative: to seek out ways to foster collaboration and resilience, or face compounding vulnerabilities.”