Stocks Just Had Their Best Day in 2 Months

US stocks ripped higher Wednesday after an encouraging update on US inflation.

• The S&P 500 jumped 107 points, or 1.8%, to 5,949.91.
• The Dow Jones Industrial Average rose 703.27 points, or 1.7%, to 43,221.55.
• The Nasdaq composite rose 466.84 points, or 2.5%, to 19,511.23.

Strong profit reports from the biggest US banks also helped launch indexes toward their best day in two months, the AP reports. Wells Fargo, Citigroup, and Goldman Sachs helped lead the way.

Wells Fargo jumped 6.7%, Citigroup rallied 6.5%, and Goldman Sachs gained 6%. They're among the first big US companies to report their results for the end of 2024, and even more focus may be on them than usual. All three reported stronger profits for the last three months of 2024 than analysts expected. Stocks of companies that would get a big benefit from lower interest rates were also toward the front of the market. Builders FirstSource, a supplier of countertops and other building materials, jumped 4.7% for one of the biggest gains in the S&P 500. It and other housing-related companies would get a boost from easier mortgage rates.

Treasury yields also eased in the bond market following the update on how much more US households had to pay in December for eggs , gasoline, housing, and other costs of living. The report said overall inflation accelerated to 2.9% from 2.7% in November. While no one wants higher inflation, the numbers were more encouraging underneath the surface. After ignoring prices for food and energy, which can zigzag sharply from month to month, underlying inflation trends slowed to 3.2% in December. Economists had thought it would remain at 3.3% for a fourth straight month, according to FactSet. The Federal Reserve pays more attention to that underlying number than the overall figure.

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Few traders expect Wednesday's data to convince the Fed to cut its main interest rate at its meeting later this month, as it's done at three straight meetings since September. But economists and analysts say it could open the door for cuts later in the year, maybe even in March, if more data comes in to show that upward pressure on inflation is abating. (More stock market stories.)