Stocks rise with all eyes on CPI report

US stocks rose on Wednesday as Wall Street counted down to the release of key consumer price data expected to show a further decline in inflation.

The S&P 500 (^GSPC) rose 1.3%, while the Dow Jones Industrial Average (^DJI) added more than 250 points or 0.8%. The tech-heavy Nasdaq Composite (^IXIC) advanced 1.8%.

US Treasury yields fell higher than the previous session, with the benchmark 10-year bond falling below 3.6%. The US dollar index also retreated.

Wells Fargo (WFC) was one of the companies in focus in early trading after the megabank said so late Tuesday night would scale back its home loan business. The move from Wells Fargo, once a leading mortgage lender, comes amid a slowdown in the housing market as skyrocketing interest rates put a damper on property purchases and refinancing deals. The share price changed little.

Elsewhere, shares of two retailers those on the brink of extinction continued to see intense trade. Shares of Party City (PRTY) plummeted 37% after rising much earlier in the day, rising 118% during Tuesday’s session. This is reported by Bloomberg News the company has sought financing for a possible Chapter 11 bankruptcy, citing people with knowledge of the preparations.

Controversial retailer Bed Bath & Beyond (BBBY) rose again a week after announcing that the company was going out of business due to its financial problems. The meme stock was up 68% after rising more than 50% in the previous two sessions.

Coin base (MINT) shares clawed back to close 1.3% after falling earlier in the day following a downgrade by Bank of America to Underperform from Neutral after the company announced on Tuesday that it cutting nearly 1,000 jobs as part of a restructuring plan.

The drums are getting louder for December’s consumer price index (CPI) on Thursday morning. Economists expect overall CPI rose 6.5% last month from last year, according to consensus estimates from Bloomberg. If realized, the reading would mark another slide lower from November’s 7.1% increase.

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The report is likely to skew bets on whether the Federal Reserve will raise interest rates by 0.25% or 0.50% by the end of its next meeting on Feb. 1, while hinting at how much higher rates are likely to go in subsequent meetings.

The last economic forecasts from the December Fed meeting officials showed that their key overnight interest rate would rise to 5.1% in 2023.

Several Federal Reserve officials, including San Francisco Fed President Mary Daly and Atlanta Federal Reserve President Raphael Bostic, have argued this week that interest rates are likely to fall. somewhere above 5%. And JPMorgan (JPM) CEO Jamie Dimon predicted in a Tuesday broadcast interview with Fox Business Network that rates can go up to 6%.

However, DataTrek’s Nicholas Colas points to a “distinctly mild” tilt in federal fund futures expectations since the start of 2023. According to CME FedWatch Tool, the odds of rates of 4.75% or higher have fallen by a total of 13.7 percentage points.

“Markets are flatly and firmly ignoring the Fed’s interest rate guidelines less than a month after they released them,” Colas wrote in a note. Instead, futures and, by extension, equity markets expect the Fed to set interest rates by the end of the year within 25-50 basis points of where they are today.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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