US stocks as a key measure of disinflation; Bank begins earnings season By Investing.com

Investing.com – U.S. stocks jumped on Wednesday as a key measure of inflation slowed unexpectedly in December, easing concerns that rising price pressures could force the Federal Reserve to take a long pause on further interest rate cuts.

At 12:54 PM EST (17:54 GMT), the index was up 639 points, or 1.5%, the index added 1.6%, and was up 2.1%.

December core CPI cools unexpectedly

Sentiment was boosted on Wednesday after data showed the headline CPI rose 0.4% month-on-month in December, slightly faster than the 0.3% pace in the previous month. Compared with the previous year, the CPI rose 2.9%, up from 2.7% in November.

But the surprise came with the so-called “” number, which excludes volatile components such as fuel and food. This rose by 0.2% month-on-month and 3.2% year-on-year, below expectations of 0.3% and 3.3% respectively.

However, some on Wall Street still see inflation risks and repeat forecasts of just one cut this year.

“Our baseline remains based on one additional 25 basis point cut from the FOMC, with the most likely timing being March or May. Risks remain skewed to a later date,” Macquarie said in a note.

Ahead of the report, there were concerns about troublesome inflation, especially after strong employment data released last week. President-elect Donald Trump’s plans to impose tough tariffs on allies and adversaries alike have also heightened concerns about price pressures.

Markets are bracing for a much slower pace of interest rate cuts in 2025, with the Fed expecting just two rate cuts – a trend that could bode poorly for risk-driven assets.

There were concerns before this release that the Fed might actually be forced by persistent inflation to raise interest rates this year.

Major banks impress with their quarterly results

In the corporate sector, a number of major banks impressed with their latest quarterly returns on Wednesday, providing a boost to the stock market’s post-election decline.

JPMorgan Chase (NYSE:) stock rose 2% after the investment banking giant posted record annual profits as dealmakers and traders reaped a windfall from the markets’ rebound in the fourth quarter.

Goldman Sachs (NYSE:) stock rose 5% after the investment bank’s fourth-quarter earnings doubled, driven by strong reading results.

Wells Fargo (NYSE:) stock rose more than 6% after the lender reported better-than-expected fourth-quarter results, helped by strong investment banking earnings.

Meanwhile, BlackRock Inc (NYSE:) rose 5% after posting beats on both the P&B as its assets reached a record high in the fourth quarter.