US stocks rose on Wednesday as Wall Street counted down to the release of key consumer price data that is projected 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) rose 1.8%.
US Treasury yields pared their upward movement from the previous session, with the benchmark 10-year note dipping below 3.6%. The US dollar index also fell.
Wells Fargo (WFC) was among the companies focused on early trading after the megabank said late Tuesday it was winding down its home lending business. The move by Wells Fargo, once a leading mortgage lender, comes amid a slowdown in the housing market as skyrocketing interest rates slow home purchases and refinancing deals. The share price changed little.
On the other hand, the shares of two retailers on the verge of extinction continued to experience intense trading. Shares of Party City (PRTY) plunged 37% after rising much earlier in the day and rallied 118% in Tuesday’s session. Bloomberg News reported that the company has sought financing for a possible Chapter 11 bankruptcy, citing people with knowledge of the preparations.
The embattled retailer Bed Bath & Beyond (BBBY) rose again a week after announcing that the company was considering bankruptcy due to its financial problems. Meme shares are up 68% after rising more than 50% in the previous two sessions.
Shares of Coinbase (COIN) rallied to close 1.3% after falling earlier in the day following a Bank of America downgrade to Underperform from Neutral after the company said Tuesday it would remove nearly 1,000 jobs as part of a restructuring plan.
The drum roll is getting louder for the December Consumer Price Index (CPI) on Thursday morning. Economists expect headline CPI to rise 6.5% from a year earlier last month, Bloomberg Consensus Estimates show. If realized, the reading would mark another slide lower from the 7.1% rise seen in November.
The report is likely to sway bets on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% at the conclusion of its next meeting on February 1, while offering clues as to how much higher. will be the rates in subsequent meetings.
The latest economic forecasts from the Fed’s December meeting showed that officials project its key overnight loan rate to rise to 5.1% in 2023.
Several Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic, have asserted this week that rates are likely to top 5%. And JPMorgan (JPM) CEO Jamie Dimon predicted in an interview with Fox Business Network broadcast on Tuesday that rates could reach 6%.
However, DataTrek’s Nicholas Colas points to a “clearly dovish” slope in expectations for federal funds futures from the start of 2023. According to the CME FedWatch Tool, rate odds of 4.75% or higher have fallen a total of 13 .7 percentage points.
“Markets are roundly and decisively ignoring the Fed’s rate guidance, less than a month after it was published,” Colas wrote in a note. “Instead, futures, and by extension, stock markets, expect the Federal Reserve to set rates at the end of the year to within 25 to 50 basis points of where they are today.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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