Wednesday, February 09, 2022

DJIA: 35,768.06, up 305.28
S&P 500: 4,587.18, up 65.64
Nasdaq: 14,490.38, up 295.92

Stocks rally ahead of CPI report

U.S. stocks finished higher in another broad-based rally Wednesday as tech-related shares extended their recovery ahead of tomorrow’s key inflation update. The Nasdaq Composite jumped 2.1%, having rebounded more than 8.5% from its January 27 low, and is now out of correction territory (defined as a 10% drawdown from a recent peak). The Dow added 305 points, while the S&P 500 climbed 1.5%, with the benchmarks back within 2.9% and 4.4% of their respective early January records.

All 11 S&P 500 sectors closed in positive territory, with four groups gaining more than 2%. In earnings, Chipotle Mexican Grill Inc. surged 10.2% after exceeding profit estimates and increasing its menu prices to offset higher costs. Elsewhere, CVS Health Corp. lost 5.4% as store closures and lower guidance overshadowed a top and bottom line beat.

Meanwhile, longer-dated Treasuries strengthened for the first time in five sessions, with the yield on the 10-year note down one basis point (0.01%) to 1.95% as a $37 billion auction of the maturity was met with robust demand. Remarks from regional Federal Reserve Presidents Bostic and Mester also helped support bond prices, as they suggested inflationary pressures should ease later this year. Tomorrow, however, a report is expected to show consumer price inflation increasing at a 7.2% annual pace, which would mark the highest level since February 1982. Globally, sovereign bond yields also stabilized following central bank commentary that leaned dovish. In commodities, West Texas Intermediate crude climbed 0.7% to $89.96/barrel after government data revealed domestic crude stockpiles dropped to the lowest level since 2018.

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