US stocks closed sharply higher on Wednesday, with the Nasdaq Composite posting its longest streak of gains since September, as the market builds a narrative of a positive start to 2023, while traders also look ahead to the inflation report due later in the day. To help find some clues about the size and pace of the next Fed rate hike in February.
Performance Indicators:
- The Dow Jones Industrial Average (DJIA) increased by 0.80%, or 268.91 points, to settle at the end of trading at the level of 33,973.01.
- The broader Standard & Poor’s 500 (SPX500) index also rose, recording gains of 1.28%, or 50.36 points, to settle at the end of trading at 3,969.61.
- The Nasdaq Composite Index (COMP), which is heavy with technology companies, rebounded to achieve gains of 1.76%, or 189.04 points, to close at 10,931.67.
US stocks ended with strong gains on Wednesday as traders awaited the looming inflation data, due for release on Thursday, with all 11 S&P sectors posting gains. The rise was led by the real estate sector, which rose by 3.6%. The Consumer Appreciation sector was also one of the market leaders, as its index increased by 2.7%, while the consumer staples sector was lagging, as it closed above its opening level and was little changed.
It comes after Federal Reserve Chairman Jerome Powell in a speech to Sweden’s Riksbank on Tuesday refrained from commenting on the outlook for monetary policy, in contrast to some hawkish messages from colleagues earlier this week.
There wasn’t much to drive the overall market during Wednesday’s trading, but Wall Street is eyeing the government’s consumer price index for December, as economists expect the report to show stability and headline inflation eased from the previous month, or 6.5% year-on-year, expected. A core price measure that excludes the more volatile food and fuel costs would rise 0.3% from November, or 5.7% year-on-year.
Investors will be looking for more evidence that inflation, which touched 9.1% in June and fell to 7.1% in November, continues to decline and may allow the Federal Reserve to ease monetary policy soon.
Yet Fed officials remain resolute in their willingness to go on the hard side to ensure an end to high inflation.
Meanwhile, there will be a slew of Fed members making comments on Thursday to accompany the CPI numbers, including Fed Chair Phil Patrick Harker, St. Louis Fed President James Bullard and Richmond Fed President Tom Barkin.
Boston Fed President Susan Collins said on Wednesday that she is leaning towards a quarter-point increase in interest rates at the next central bank’s next two-day meeting, which begins later this month and extends into February, although she said she Still “too data-driven”.
The largest US banks, which begin the fourth-quarter earnings season later this week, are expected to report lower quarterly earnings as recession risks rise due to tightening monetary policy.
Separately, air travelers were still feeling the effects of earlier disruptions to flights across the country on Wednesday, after more than 8,600 flights in, in, or out of the United States were delayed, and more than 1,200 canceled due to a sudden FAA computer outage, it said. The Federal Aviation Administration said it will continue to investigate the cause of the problem. The NOTAM system that was responsible for the malfunction alerts pilots to potential hazards along the flight path, and Transportation Secretary Pete Buttigieg said the one-and-a-half-hour grounding of flights was to “make absolutely sure” the plane could not take off without the necessary safety information.
The disruption comes just weeks after a severe winter storm canceled thousands of flights over the holiday period.