Stocks rise with focus on CPI later this week
U.S. stocks ascended at Wednesday's open as Wall Street counted down to a crucial inflation reading and big bank earnings later this week.
SNP - Free Realtime Quote (USD) 3,935.65+16.40(0.42%)
As of 10:51AM EST.Market open.
U.S. Treasury yields pared their move higher from the previous session, with the benchmark 10-year note falling below 3.6%. The U.S. dollar index also retreated.
Wells Fargo (WFC) was among companies in focus in early trading after the megabank said late Tuesday it would scale back its home lending business. The move by Wells Fargo, once a leading mortgage lender, comes amid a slowdown in the housing market as sky-high interest rates put a damper on property purchases and refinancing agreements. The stock price was little changed.
Elsewhere, shares of two retailers on the brink of extinction continued to see intense trading. Shares of Party City (PRTY) surged 31% after a spiking 118% in Tuesday's session after Bloomberg News reported the company has sought funding for a potential Chapter 11 bankruptcy, citing people with knowledge of the preparations.
Embattled retailer Bed Bath & Beyond (BBBY) also ripped higher again one week after announcing the company was considering bankruptcy due to its financial struggles. The meme stock jumped 25% after rising more than 50% across the prior two sessions.
Coinbase (COIN) shares fell more than 5% following a downgrade by Bank of America to Underperform from Neutral after the company said Tuesday it would slash nearly 1,000 jobs as part of a restructuring plan.
The drumroll is growing louder for December's Consumer Price Index (CPI) Thursday morning. Economists expect headline CPI rose 6.5% over the prior year last month, Bloomberg consensus estimates show. If realized, the reading would mark another glide lower from the 7.1% increase 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 Feb. 1, while offering hints on how much higher rates are likely to go in subsequent meetings.
The latest showed officials project their key overnight lending rate rising to 5.1% in 2023.
Several Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Federal Reserve President Raphael Bostic, have asserted this week that rates will likely go . And JPMorgan () CEO Jamie Dimon predicted in an interview with Fox Business Network aired Tuesday .
However, DataTrek's Nicholas Colas points out a "distinctly dovish" tilt in federal funds futures’ expectations since the start if 2023. According to CME FedWatch Tool, the odds for rates of 4.75% or higher have fallen an aggregate 13.7 percentage points.
"Markets are roundly and decisively ignoring the Fed’s rate guidance, less than 1 month after they published it," Colas wrote in a note. "Instead, futures — and by extension, stock markets — expect the Fed to be setting rates at year end within 25 – 50 basis points of where they are today.