Wednesday, January 12, 2022

DJIA: 36,290.32, up 38.30
S&P 500: 4,726.35, up 13.28
Nasdaq: 15,188.39, up 34.94

Stocks rise; dollar falls most since May

U.S. stocks closed modestly higher on Wednesday after the latest update on inflation matched consensus estimates. As expected, the Consumer Price Index (CPI) jumped 7% year-over-year last month, marking the fastest pace since June 1982. The headline reading reflected a 0.5% increase in December, topping expectations of a 0.4% gain but slowing from the prior 0.8% advance. Core CPI (excluding food and energy) jumped 5.5% year-over-year, the most since 1991. The S&P 500 added 0.3% after yesterday snapping a five-session losing streak. The Dow gained 38 points, while the Nasdaq Composite rose 0.2%.

Treasuries continued to stabilize from last week’s rout. The yield on the 10-year note dipped one basis point (0.01%) to 1.73% after a generally solid auction of the maturity. However, the two-year note yield breached 0.90% for the first time since March 2020 as market participants continued to brace for a potential Federal Reserve rate hike in March. In commodities, WTI crude climbed 1.8% to $82.69/barrel after domestic stockpiles hit their lowest level since October 2018. Also supporting oil prices, a gauge of the U.S. dollar slumped 0.7%, suffering its worst session since May.

Ten of 11 S&P 500 sectors closed in positive territory, with Materials notably outperforming. Miner Freeport-McMoran Inc. rallied 4.9% as copper prices touched their highest level since October amid tight supply. Health Care lagged, with Biogen Inc. sliding 6.7% on news Medicare would restrict access to its Alzheimer’s drug to patients enrolled in clinical trials. In earnings, Jefferies Financial Group Inc. fell 9.3% as a sharp drop in trading revenue weighed on its quarterly results.

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