Stocks rise with all eyes on CPI report

U.S. stocks rose on Wednesday as Wall Street counted down to the release of key consumer price data that is expected to show a further decline in inflation.

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

US Treasury yields pared their rise from the previous session, with the benchmark 10-year note falling below 3.6%. The US dollar index also fell.

Wells Fargo (WFC) was among the companies targeted in early trading after the megabank said late Tuesday that it reduce its mortgage lending activity. The move by Wells Fargo, once a top mortgage lender, comes amid a slowing housing market as sky-high interest rates have dampened home purchases and refinance deals. The share price changed little.

Elsewhere, shares of two retailers on the brink of extinction continued to see intense exchanges. Party City Stocks (PRTY) plunged 37% after jumping much earlier in the day and climbing 118% in Tuesday’s session. Bloomberg News reported the company has applied for funding for a potential Chapter 11 bankruptcy, citing people with knowledge of the preparations.

Embattled retailer Bed Bath & Beyond (BBBY) rose again a week after announcing that the company was considering bankruptcy due to its financial difficulties. The meme stock jumped 68% after rising more than 50% in the previous two sessions.

Coinbase (PIECE OF MONEY) shares recovered to close 1.3% higher after falling earlier in the day following a Bank of America downgrade to Underperform from Neutral after the company announced on Tuesday that it would cut nearly 1,000 jobs as part of a restructuring plan.

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

The drumbeat is growing louder for the December Consumer Price Index (CPI) on Thursday morning. Economists expect the headline CPI to have risen 6.5% from a year earlier last month, according to consensus estimates from Bloomberg. If carried out, the reading would mark another down from 7.1% increase in November.

The report is likely to influence bets on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% at the end of its next meeting on February 1, while offering hints of likely rate hikes at subsequent meetings.

The last Economic forecast from the Fed’s December meeting showed that officials expect their main overnight lending rate to hit 5.1% in 2023.

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

However, DataTrek’s Nicholas Colas points to a “markedly dovish” tilt in fed funds futures expectations since the start of 2023. According to CME FedWatch Tool, rate odds of 4.75% or higher have fallen 13 .7 percentage points in total.

“Markets are bluntly and decisively ignoring the Fed’s rate guidance, less than a month after it was released,” Colas wrote in a note. “Instead, futures — and by extension, stock markets — expect the Fed to set rates at year-end within 25 to 50 basis points of their current level. .

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

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