MARKET SNAPSHOT

U.S. stocks rallied and Treasury yields broadly fell on softer-than-expected core infation data. Oil reached its highest levels since mid-August on winter demand and U.S. sanctions on Russia. Gold was higher on the inflation data and the dollar fell.

MARKET WRAPS

EQUITIES

U.S. stocks soared as investors celebrated a positive report on inflation. Nvidia rebounded, while Microsoft gave quantum stocks a boost.

The Dow Jones Industrial Average rose 1.7% while the S&P 500 surged 1.8%. The Nasdaq Composite outperformed as it retook its 50-day moving average and held a hefty 2.5% gain.

Boosting the market was renewed hopes of a rate cut by June, which surged after the consumer price index trended lower in December. Although headline inflation rose 0.4% vs. estimates of 0.3%, core inflation cooled. Bank earnings moved several of those stocks. JPMorgan Chase beat views with revenue of $42.77 billion and earnings of $4.81 per share.

Earlier Wednesday, Chinese shares ended mostly lower, weighed by tech hardware and pharmaceutical stocks. China's central bank injected a near historic high amount of liquidity into the nation's banking system to meet cash demand ahead of the Lunar New Year holidays.

The benchmark Shanghai Composite Index ended 0.4% lower, the Shenzhen Composite Index declined 0.8%, and the ChiNext Price Index was off by 1.8%. In Hong Kong, the benchmark Hang Seng Index closed 0.3% higher, supported by semiconductor and tech stocks.

Japanese stocks closed lower. The Nikkei Stock Average fell 0.1% as falls in machinery and pharmaceutical stocks offset gains in financial shares.

Stocks in Australia slipped, as the S&P/ASX 200 Benchmark Index declined 0.2%. The blue-chip S&P/ASX 20 Index, which includes the country's major banks and iron-ore miners, dropped 0.3%.

New Zealand's S&P/NZX 50 closed 0.5% higher amid strength in utility and financial stocks.

COMMODITIES

Oil futures settled higher, finding support after snapping a three-day winning streak that had been driven in part by wider U.S. sanctions on Russia as well as cold weather in much of the U.S. and Europe.

West Texas Intermediate crude for February delivery rose 3.3% to settle at $80.04 a barrel. March Brent crude, the global benchmark, rose 2.6% to $82.03 a barrel. Brent and WTI marked their highest front-month settlements since Aug. 12.

Front-month January gold futures settled up 1.3% at $2,712.50 an ounce, posting their largest gain since Dec. 20.

Driving gold higher was the renewed idea of interest rate cuts by the Fed after the U.S. CPI data came in softer than expected, with consumer prices seen as having risen 2.9% in the past 12 months.

TODAY'S TOP HEADLINES

Inflation Ticks Up to 2.9%, but Underlying Price Gains Are Muted

Markets cheered a December inflation report that suggested underlying price pressures are easing, but the Federal Reserve still isn't likely to cut interest rates anytime soon given President-elect Donald Trump's plans for the economy.

The overall consumer-price index came in relatively hot, rising 2.9% over the year, the Labor Department said Wednesday. The index rose 0.4% from the previous month, driven by a 4.4% jump in gas prices.

The so-called core CPI, which excludes volatile food and energy prices, rose 0.2%, its smallest gain since July and less than the 0.3% increase expected by economists.

Fed's Williams Wants More Progress Toward Inflation Target

HARTFORD, Conn.-New York Fed President John Williams said he expects inflation to continue cooling toward the central bank's 2% target this year, adding that he won't be satisfied until the goal is reached.

Wednesday morning's inflation report brought reassuring signs that price pressures cooled through the end of 2024, but the new figures look set to leave the core version of the Federal Reserve's preferred inflation gauge well above target last month.

Inflation has slowed significantly since it peaked in 2022, but the Fed won't be satisfied without a further downtrend, Williams said.

U.S. Further Tightens Chip Restrictions, Adds Chinese Firms to Blacklist

The Biden administration rolled out a flurry of new restrictions on Chinese companies and their access to advanced chips, part of a last-gasp clampdown on the adversary's ability to harness artificial intelligence for its military and tech sector.

The move on Wednesday tightened oversight on chip makers that ship advanced semiconductors to China, requiring them to seek licenses for transactions unless the chips' performance falls below a technical threshold. The restrictions apply to non-U.S. companies like Taiwan Semiconductor Manufacturing Co. because they use American technology when they make chips.

The rules, which came out in a deluge Wednesday morning, also put more than two dozen new entities on a trade blacklist. Ten of those were added for advancing China's military through development of artificial intelligence, while another 16 are on the list for acting on Beijing's behalf to further its domestic chip ambitions, the Bureau of Industry and Security said in separate statements. One was included for developing key semiconductor technology for China's advanced chip-making facilities, the bureau said.

Israel, Hamas Agree to Deal to Pause Fighting in Gaza

Negotiators for Israel and Hamas agreed to a deal to pause their fighting in the Gaza Strip, Arab mediators and the U.S. said Wednesday, opening a pathway to end a 15-month war that laid waste to the enclave, sparked a wider regional war and roiled politics in the West.

The cease-fire agreement will come into effect on Sunday, Qatar's prime minister, Mohammed bin Abdulrahman Al Thani, said late Wednesday. He said Qatar, alongside Egypt and the U.S.-all of whom helped mediate the agreement-will work to ensure its implementation.

Israeli President Isaac Herzog welcomed the cease-fire deal in a speech on Wednesday, calling on Israeli Prime Minister Benjamin Netanyahu's government to approve it.

Biden Administration Advances Plan to Cut Nicotine in Cigarettes

The Biden administration in its final days is advancing a plan to sharply reduce the nicotine in all cigarettes sold in the U.S., though the incoming Trump administration isn't expected to follow through on the idea.

The Food and Drug Administration on Wednesday published a proposed rule laying out the details of the plan, which would mandate a reduction of nicotine in cigarettes to minimally addictive or nonaddictive levels.

If the Trump administration did move forward with the plan, the policy would mark the federal government's biggest effort to curb cigarette smoking since a landmark 1998 legal settlement in which tobacco companies paid $200 billion to help states pay for healthcare. Such a rule would take years to implement, and tobacco companies would likely take legal action to try to block it.

JPMorgan Chase and Goldman Sachs Post Surging Profits

Big bank profits surged in the fourth quarter and Wall Street roared back to life, with net income rising 50% at JPMorgan Chase and more than doubling at Goldman Sachs.

The banks benefited as big corporate clients grew optimistic about the economy and the incoming Trump administration, spurring a return to dealmaking, fundraising and trading.

Bankers say that an enormous appetite for capital is being driven by an acceleration of deal activity and companies' financing needs. Corporate clients and CEOs around the world are increasingly confident and looking to finance big-ticket investments, ranging from data centers to major technology upgrades. That has banks projecting more business in coming months as well.

Wall Street's Pre-Eminent Short Seller Is Calling It Quits

Nate Anderson, the short seller who wiped billions of dollars off the market values of companies including Nikola and Icahn Enterprises, is shutting down his firm, Hindenburg Research. He cited the toll the work took on his well-being.

"I've spent most of the last eight years either in a fight or preparing for the next one," he said in an interview with The Wall Street Journal.

Anderson said he felt that he and Hindenburg had accomplished what they had set out to do, showing it was possible to build a business from hunting fraud and other issues in public and private markets. He hopes to soon share resources and training materials so others can use Hindenburg's tactics in their own investigations.

Expected Major Events for Thursday

00:00/AUS: Jan Consumer Inflationary Expectations Survey

00:30/AUS: Dec Foreign Exchange Transactions and Holdings of Official Reserve Assets

00:30/AUS: Dec Labour Force

01:00/SKA: Bank of Korea Monetary Policy Committee meeting and decision

04:30/JPN: Nov Revised Retail Sales

08:30/HK: Nov External Merchandise Trade: Volume & Price Statistics

09:59/CHN: Dec FDI Foreign Direct Investment

15:30/AUS: Nov Australia Conference Board Leading Index

21:30/NZ: Dec BNZ - BusinessNZ Performance of Manufacturing Index $(PMI.UK)$

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(END) Dow Jones Newswires

January 15, 2025 17:00 ET (22:00 GMT)

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