Wall Street Rallies As Treasury Yields Fall, Banks Smash Q4 Earnings, Oil Hits $80: What's Driving Markets Wednesday?
Wall Street staged a strong rebound on Wednesday, as mixed inflation data bolstered investor confidence in the Federal Reserve's continuation of easing cycle in 2025, easing recent market anxieties.
The headline Consumer Price Index rose 2.9% year-over-year in December, up from November’s 2.7% and aligning with economist forecasts. On a monthly basis, headline inflation increased by 0.4%, up from November’s 0.3%, marking the sharpest monthly rise since March 2024.
The inflation report strengthened market expectations for Fed rate cuts in 2025. The probability of a rate cut by June climbed to 63%, up from 55% the previous day, with December futures now pricing in a 50% chance of two rate cuts.
The S&P 500 advanced 1.5% by midday trading in New York, and the Dow Jones followed suit with a similar gain, both supported by strength in financial stocks. The Nasdaq 100 outperformed, rising 1.9%, while small-cap stocks posted a 1.7% gain.
Key financial giants, including JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C), Goldman Sachs Group Inc. (NYSE:GS), Wells Fargo & Co. (NYSE:WFC), Bank of New York Mellon Corp. (NYSE:BK), and BlackRock Inc. (NYSE:BLK), exceeded Wall Street's fourth-quarter 2024 earnings expectations.
The Financial Select Sector SPDR Fund (NYSE:XLF) surged nearly 2.2%, leading all S&P 500 sectors and recording its strongest one-day gain in over two months.
In the bond market, yields on the 2-year Treasury note, which is highly sensitive to interest rate expectations, fell 9 basis points to 4.28%, while 30-year yields dropped 8 basis points to 4.89%. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) gained 1.3% as bond prices rose.
The U.S. Dollar Index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), remained flat, with dollar strength against the euro offset by weakness versus the yen.
West Texas Intermediate — as tracked by the United States Oil Fund (NYSE:USO) — rallied 2%, hitting $80 a barrel during the day amid a stronger-than-expected drop in commercial crude stocks last week.
Bitcoin (CRYPTO: BTC) jumped 2.6%, nearing $99,000, buoyed by optimism surrounding potential Fed rate cuts. Meanwhile, gold, tracked by the SPDR Gold Trust (NYSE:GLD), gained 0.5%.
Wednesday’s Performance In Major U.S. Indices, ETFs
Major Indices
Price
1-day % chg
Nasdaq 100
21,142.06
1.9%
Russell 2000
2,257.59
1.7%
S&P 500
5,932.76
1.5%
Dow Jones
43,153.53
1.5%
According to Benzinga Pro data:
- The SPDR S&P 500 ETF Trust (NYSE:SPY) rose 1.5% to $590.96.
- The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 1.5% to $431.31.
- The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rallied 1.9% to $514.49.
- The iShares Russell 2000 ETF (NYSE:IWM) increased 1.8% to $223.77.
- The Financial Select Sector SPDR Fund outperformed, up 1.2%; the Consumer Staples Select Sector SPDR Fund (NYSE:XLP) lagged, down 0.3%.
Wednesday’s Stock Movers
- Citigroup Inc. rallied over 7%, in reaction to stronger-than-expected earnings, marking the strongest performance within the S&P 500 index.
- Intuitive Surgical Inc. (NASDAQ:ISRG) rose 6.9% after RBC raised its 12-month price target to $641.
- Tesla Inc. (NASDAQ:TSLA) shares climbed more than 5% after RBC increased its price target for the stock from $313 to $440, while reaffirming its outperform rating.
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