US stocks rose on Wednesday as Wall Street counted down to the release of key consumer price data 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 tech-heavy Nasdaq Composite (^IXIC) gained 1.8%.
US Treasury yields fell higher than the previous session, with the benchmark 10-year bond falling below 3.6%.The US dollar index also retreated.
Wells Fargo (WFC) was one of the companies in the spotlight early in trading after the megabank announced late Tuesday that it would be scaling back its home lending business.The move from Wells Fargo, once a leading mortgage lender, comes amid a slowdown in the housing market as skyrocketing interest rates put a damper on property purchases and refinancing deals.The share price changed little.
Elsewhere, the shares of two retailers on the brink of extinction continued to trade heavily.
Shares of Party City (PRTY) fell 37% after rising much earlier in the day and rose 118% during Tuesday’s session.Bloomberg News reported that the company has sought financing for a possible Chapter 11 bankruptcy, citing those with knowledge of the preparations.
Embattled retailer Bed Bath & Beyond (BBBY) ripped higher again a week after announcing that the company would file for bankruptcy due to its financial troubles.
The meme stock was up 68% after rising more than 50% in the previous two sessions.
Coinbase (COIN) shares clawed back to close 1.3% after falling earlier in the day following a downgrade by Bank of America from Neutral to Underperform after the company announced Tuesday it would cut nearly 1,000 jobs as part of of a restructuring plan.
The drums are getting louder for December’s consumer price index (CPI) on Thursday morning.Economists expect overall CPI rose 6.5% last month from last year, according to consensus estimates from Bloomberg.If realized, the reading would mark another decline from the 7.1% increase seen in November.
The report is likely to skew bets on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% by the end of its next meeting on Feb.1, while hinting at how much higher rates are likely to go in next meetings.
The latest economic forecasts from the Fed’s December meeting showed that officials had estimated their key overnight interest rate at 5.1% in 2023.
Several Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Federal Reserve President Raphael Bostic, have argued this week that interest rates are likely to hit somewhere above 5%.And JPMorgan (JPM) CEO Jamie Dimon predicted in an interview broadcast Tuesday with Fox Business Network that rates could reach 6%.
However, DataTrek’s Nicholas Colas points to a “distinctly mild” tilt in federal fund futures expectations since the start of 2023.According to CME FedWatch Tool, the odds of rates of 4.75% or higher have fallen by a total of 13.7 percentage points.
“Markets are flatly and firmly ignoring the Fed’s interest rate guidelines less than a month after they released them,” Colas wrote in a note.“Instead, futures – and by extension equity markets – expect the Fed to set interest rates within 25 to 50 basis points of where they are at the end of the year.
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Alexandra Semenova is a reporter for Yahoo Finance.
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