S&P 500 and Nasdaq Composite Jumped 1% After CPI Report and Blowout Bank Earnings

Barry Adams
15 Jan, 2025
New York City

Stock market indexes rebounded in early trading after consumer price inflation met market expectations and leading financial services companies reported blowout earnings. 

The S&P 500 index increased 1.2%, and the Nasdaq Composite advanced 1.4% after investors welcomed the cooler core inflation in December. 

Consumer price inflation accelerated for the third month in a row to 2.9%, and core inflation, which excludes food and energy prices, slowed to an annual 3.2% from 3.3%, according to the monthly report released by the U.S. Bureau of Labor Statistics. 

The annual rate of inflation accelerated from 2.7% in November, largely because of an increase in energy prices from a lower base in the previous year. 

However, shelter cost continued to advance at 4.6% compared to 4.7%, food inflation accelerated to 2.5% from 2.4%, and transportation inflation advanced to 7.3% from 7.1% annual rate in the previous month. 

On the other hand, prices for used cars and trucks fell at a slower annual pace of 3.3% from 3.4%, and new vehicles eased 0.4% compared to a fall of 0.7% annual pace in the previous month. 

Wall Street indexes advanced after investors focused on the direction of core inflation and overlooked the fact that prices are still rising at a faster rate than the target rate of 2% and from a higher base set by the Federal Reserve. 

On Tuesday, the statistical agency said annual producer price inflation accelerated to 3.3% in December from 3.0% in the previous month, and the core rate of inflation advanced to 3.5%. 

Two inflation reports have been closely watched by investors after nonfarm payrolls expanded at a faster pace of 256,000 in December, confirming a strong jobs market and supporting the case for the Federal Reserve to slow or maybe even eliminate its projected rate cuts in 2025. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 1.3% to 5,918.03, the Nasdaq Composite rose 1.6% to 19,354.95, and the Russell 2000 index inched up by 1.1% to 2,219.24. 

The yield on 2-year Treasury notes edged down to 4.30%, 10-year Treasury notes inched down to 4.70%, and 30-year Treasury bonds declined to 4.92%.

WTI crude oil increased $0.62 to $78.13 a barrel, and natural gas prices edged up 4 cents to $3.99 a thermal unit.

Gold increased by $13.23 to $2,688.56 an ounce, and silver rose by $0.32 to $30.19. 

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased by 0.48 to 108.43 and traded at a two-year high. 

 

U.S. Stock Movers 

Citigroup Inc. jumped 4.5% to $76.79 after the financial services company reported better-than-expected quarterly results, driven by an increase in revenue in investment banking fixed-income trading. 

The bank announced a $20 billion stock buyback program. 

Goldman Sachs Group jumped 4% to 594.51 after the company reported stronger-than-expected quarterly revenue and earnings. 

The investment bank benefitted from a rebound in investment banking activities and sold income in its fixed-income trading and asset management unit. 

JPMorgan Chase increased 0.8% to $249.40 after the New York-based company reported better-than-expected net interest income, fixed income trading revenue, and investment banking fees. 

Total revenue increased 10% to $43.74 billion, driven by a surge in net interest income to $23.47 billion, fixed-income trading revenue jumped 20% to $5 billion, and investment banking fees soared 49% to $2.48 billion. 

BlackRock Inc. advanced 5% to $1,010.91 after the world's largest asset manager reported fourth-quarter earnings ahead of market expectations. 

Assets under management increased to $11.551 trillion from $11.475 trillion.