US stocks surged higher on Wednesday after strong bank earnings and Core CPI climbed 0.2%, an easing from November’s 0.3%. It was the first time since July the CPI price growth decelerated. The report showed vehicle, grocery, appliances, electronics, and rental car prices down while auto insurance, airfare, rent, housing, education, and restaurant prices are up.
The Dow Jones rose 700 points (1.6%), while the S&P 500 climbed 1.8% and the Nasdaq soared 2.5%. The 10-year Treasury shed 13 basis points, dropping the yield to around 4.65%. Rate sensitive small-cap Russell 200 Index rose almost 2%. FedWatch shows markets pricing a possible rate cut in June.
JPMorgan Chase (JPM), Goldman Sachs (GS), BlackRock (BLK), Wells Fargo (WFC), and BNY (BK) all beat optimistic analyst expectations.
A phased ceasefire deal between Israel and Hamas was completed on Wednesday. The initial phase is 6 weeks which includes gradual withdrawal of Israeli forces from the Gaza Strip and the release of hostages taken by Hamas in exchange for Palestinian prisoners held by Israel.
Taiwan Semiconductor Manufacturing Co. (TSM) projects their quarterly sales and capital expenditures will beat analyst estimates as AI hardware spending remain robust and resilient. The company sees spending $38B to $42B on technology and capacity improvements, which is about 19% higher than expected. They predict $25.8B in revenue for the March quarter which is 6% above current estimates.
Corporate earnings premarket include UnitedHealth Group Inc (UNH), Bank of America (BAC), Morgan Stanley (MS), PNC Financial Services Group, Inc (PNC), U.S. Bancorp (USB), MBT Bank Corp (MTB), and First Horizon Corp (FHN). Earnings after the bell include J.B. Hunt Transport Services, Inc (JBHT) and Bank OZK (OZK).
The economic calendar includes Retail Sales, Unemployment Claims, Philly Fed, and Import prices @ 8:30am ET, Business Inventories, and NAHB Housing Market Index @ 10:00am ET. Fed speakers include New York Fed President John Williams @ 11:00am ET.
Volatility jumped higher on the CPI reaction. The ES 5-day average daily range is now 83.5 points.
Whale bias is leaning bullish into the 8:30am ET economic numbers on light overnight large trader volume.