On Wednesday, the Dow Jones Industrial Average and the S&P 500 wrapped up a three-day winning streak, driven by a relief rally following December’s consumer price index report and a notable drop in Treasury yields – the largest decline seen in several months.
The CPI report came in softer than many had anticipated, especially in its core monthly reading. This led traders to slightly increase their expectations for a Federal Reserve interest rate cut of a quarter-point by June. There’s also a growing belief that we might see two rate cuts by the end of the year.
According to preliminary data, the Dow Jones Industrial Average surged by 703.27 points, which translates to a 1.7% increase, closing at 43,221.55. Meanwhile, the S&P 500 climbed by 107 points, or 1.8%, ending the day at 5,949.91. The Nasdaq Composite saw a rise of 466.84 points, or 2.5%, to close at 19,511.23. This was notably the Nasdaq’s first rise in the last six sessions.
For all three indexes, this represents their best single-day performance since November 6, right after the U.S. presidential election. Additionally, the Dow and Nasdaq achieved their largest percentage gains on a CPI-release day since November 2022, while the S&P 500 marked its highest percentage increase for such a day since November 2023.
