U.S. stocks closed slightly higher on Wednesday after data showed that inflation hit a four-decade high but came in largely in line with economists’ expectations. This somewhat eased fears that the Fed would have to roll back its financial stimulus more aggressively than it is being expected. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.1% or 38.30 points to end at 36,290.32.
The S&P 500 rose 0.3% or 13.28 points to finish at 4,726.35 points. Materials and consumer discretionary stocks were the best performers.
The Materials Select Sector SPDR (XLB) gained 1%, while the Consumer Discretionary Select Sector SPDR (XLY) added 0.7%. Ten of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq gained 0.2% or 34.94 points to close at 15,188.39 points.
Shares of Tesla, Inc. TSLA and Microsoft Corporation MSFT gained 3.9% and 1%, respectively. Tesla has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The fear-gauge CBOE Volatility Index (VIX) was up 4.29% to 17.62. A total of 10.251 billion shares were traded on Wednesday, lower than the last 20-session average of 10.496 billion. Advancers outnumbered decliners on the NYSE by a 1.26-to-1 ratio. On Nasdaq, a 1.37 to-1 ratio favored declining issues.
Investors Feel Relieved
Investors were awaiting December’s reading on inflation that had kept them worried over the past few days. However, the latest reading on inflation didn’t disappoint them much although it came in near a 40-year high as it wasn’t as worse as anticipated.
The consumer price index jumped 0.5% in December month over month, which was slightly higher than economists’ expectations of a rise of 0.4%. The rise was primarily driven by rising costs of food, shelter and used cars.
Following the report investors somewhat breathed a sigh of relief as fears that the Fed would have to roll back its financial stimulus more aggressively than it is being expected cooled off a bit.
Stocks linked to economic growth were some of the better performers on Wednesday. Shares of Freeport-McMoRan Inc. FCX jumped 5%. However, health care stocks took a beating. Shares of Merck & Co., Inc. MRK fell 0.6%, while Amgen Inc. AMGN declined 0.3%.
The latest reading on inflation for December was the most anticipated report on Wednesday. Data released by the government showed that the consumer-price index rose 0.5% in December on a monthly basis, slightly higher than economists’ expectations of 0.4%. On a year-over-year basis, inflation grew 7%, hitting its highest level since 1982 but in-line with economists’ expectations.
The core consumer-price index that excluded volatile food and energy prices rose 0.6% in December. Year-over year, core CPI jumped to 5.5%, hitting a 31-year high.
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