The Dow Jones Industrial Average jumped over 700 points after Wednesday’s inflation report pleased investors. Nvidia (NVDA) rebounded, while Microsoft (MSFT) gave quantum stocks a boost in the stock market today.
The consumer price index trended lower in December. Although headline inflation rose 0.4% vs. estimates of 0.3%, core inflation cooled. Prices of goods and services apart from food and energy rose 0.2% vs. forecasts for 0.3% month on month. On an annual basis, core prices rose 3.2% vs. economists’ estimates of 3.3%. Annually, headline inflation matched views of a 2.9% increase.
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That brought back hopes of a rate cut in June. According to the CME FedWatch Tool, odds of a 25 basis cut in the summer sit at 44.6%, higher than odds for no change from current target rates. The yield on the benchmark 10-year Treasury note dived 12 basis points to 4.66%.
The Beige Book will be released later Wednesday with anecdotal evidence of business activity in the Federal Reserve’s 12 districts.
The S&P 500 and Dow both surged 1.8%, but the Nasdaq composite outperformed as it retook the 50-day moving average. The tech-dominated index held a hefty 2.2% gain in early trades Wednesday.
Volume ran higher on the NYSE and on the Nasdaq compared with the first hour of trading on Tuesday. Breadth was astoundingly positive on the NYSE, with advancers running nearly 12-to-1 vs. decliners. On the Nasdaq they beat decliners by more than 4-to-1.
The small-cap Russell 2000 outperformed again and rose 2.3% following Tuesday’s 1.1% gain. But the index’s 21-day exponential moving average still lags the 50-day line.
The Innovator IBD 50 ETF (FFTY) also gained 3.5%. Robinhood Markets (HOOD), Rocket Lab (RKLB), Intuitive Machines (LUNR), Reddit (RDDT) and Argan (AGX), which is on Investor’s Business Daily’s Leaderboard model portfolio watchlist, rallied 4.4% to 9.4%.
Dow Jones Gets Boost From Nvidia Stock
All components in the Dow Jones gained, with the exception of UnitedHealth (UNH), which was down 1.1%.
Nvidia rebounded nearly 2% and attempted to break a five-day losing streak. Shares remained below the 50 day moving average. The stock suffered a sell signal earlier this week.
Bank earnings moved several of those stocks. JPMorgan Chase (JPM) beat views with revenue of $42.77 billion and earnings of $4.81 per share. Analysts polled by FactSet had pegged $4.09 a share on $41.9 billion in revenue. Shares broke out from a cup with handle base’s buy point of 245.69 on Tuesday and added 1%, keeping the stock in a buy zone to 257.97.
Goldman Sachs‘ (GS) performance was impressive after the Dow component turned out $13.87 billion in revenue and earnings of $11.95 per share. Estimates had called for $12.4 billion in revenue with per-share earnings of $8.21. Shares cleared the 50-day moving average as they work on a flat base with a buy point of 612.73.
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Wells Fargo (WFC), Citigroup (C) and BlackRock (BLK) also rose after their earnings reports. Wells Fargo also retook the 50-day moving average as it continues to trade in a flat base with a buy point of 78.13.
Taiwan Semiconductor (TSM) will report earnings on Thursday. Analysts estimate a 33% increase in sales to $26.2 billion with earnings of $2.20 per share, a 51% increase from the prior year. Shares are hovering above the 50-day moving average and near a 205.63 buy point.
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In health care, sports medicine biotech Vericel (VCEL) fell below the 50-day moving average after fourth-quarter guidance disappointed. It is still forming a flat base.
Quantum Stocks Get Microsoft Boost
Quantum stocks got a boost after Microsoft (MSFT) launched Quantum Ready, a new program from its Azure cloud computing business.
IonQ (IONQ) and D-Wave Quantum (QBTS) soared about 25% each. D-Wave announced a partnership aimed at increasing government adoption of its quantum computing technology.
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