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This is a report from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open provides investors with information on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Baseline CPI is lower than estimates
The US consumer price index increased seasonally 0.4% per month in December, putting the 12-month inflation rate at 2.9%, according to the US Bureau of Labor Statistics reported Wednesday. Core inflation, excluding food and energy prices, rose by 0.2% month-on-month and by 3.2% year-on-year. The annual indicator decreased by 0.1 percentage point compared to November. Both headline readings were also 0.1 percentage points below expectations.
Ceasefire agreement between Israel and Hamas
Israel and Hamas on Wednesday a cease-fire agreement was reached and the hostages were released finish a 15-month war in the Gaza Strip. Israel’s security cabinet must still vote on the agreement before it can be implemented. If approved, the first phase of the agreement will include a complete ceasefire and the withdrawal of Israeli forces from the populated areas of the Gaza enclave, US President Joe Biden said.
The markets are having their best day in months
US stocks popped up on wednesday for the best day since November amid cooler-than-expected inflation figures and Weakening Treasury yields. All-European The Stoxx 600 Index added 1.33%, snapped a three-day losing streak and recorded the best performance since August. UK government bond yields fell sharply after the official data showed UK inflation falls to 2.5% in December.
JPMorgan Chase pulls back past earnings estimates
JPMorgan Chase published by strong earnings for the fourth quarter. The bank’s profit rose 50% to $14 billion in the period, while revenue rose 10% to $43.74 billion. That’s thanks to net interest income of $23.47 billion, beating StreetAccount’s estimate by nearly $400 million. JPMorgan executives said the bank would increasing share repurchases even as CEO Jamie Dimon called the stock expensive in May.
Goldman Sachs roughly doubles profits
Goldman Sachs’s earnings in the fourth quarter beat estimates on stronger-than-expected trading income. The bank said profit roughly doubled from a year ago to $4.11 billion, while revenue jumped 23% to $13.87 billion. “There was a a significant shift in CEO confidenceespecially after the US election results,” CEO David Solomon said on a conference call Wednesday.
(PRO) Be careful with earnings next week
Approximately 7% of companies in S&P 500 index plans to report earnings next week. CNBC Pro scoured the companies reporting earnings next week for those that analysts are turning increasingly bearish on, and found six companies that Profit estimates are revised downwards for the last three months.
Bottom line
Finally, a streak of good news for the bulls after a dismal start to the year that saw markets post weekly losses amid persistent inflation concerns.
Back to top: Inflation in the US was lower than expected in December. To be sure, headline inflation for the month was 0.1 percentage point higher than the Dow Jones consensus estimate.
But the U.S. Federal Reserve pays more attention to core inflation because it strips out volatility in energy and food prices, giving a more accurate reflection of price changes in the economy. And monthly and annual core inflation was lower than expected.
Indeed, like CNBC’s Jeff Cox noted“Most of the CPI increase came from a 2.6% increase in energy prices for the month, which pushed gasoline prices up 4.4%. According to the BLS, this accounted for about 40% of the index’s growth. “
“Today’s CPI figure removes additional rate hikes that some market participants have started to price in early,” said John Kershner, head of US securitization products and portfolio manager at Janus Henderson Investors.
The The yield on 10-year US Treasuries fell sharply to now stand at 4.655%, compared to last Friday’s close of 4.774%, as traders tempered their interest rate expectations.
This gave the stock room to breathe. The S&P 500 jumped by 1.83%, art Dow Jones industrial index rose by 1.65% and Art Nasdaq Composite increased by 2.45%. It was the best day for all three major averages since November 6.
Upbeat bank earnings reports also added to the cheer. Their financial performance is often a predictor of the general direction of the economy: Bank profits rise when businesses and consumers are more financially active, which in turn boosts economic growth.
For investors, the stars aligned on Wednesday. But just as the heavens keep changing, instability in the form of a new US administration and politics remains.
— CNBC’s Jeff Cox, Hakyun Kim and Lisa Kayla Hahn contributed to this report.
