U.S. Stock Market Skyrockets Amid Easing Inflation and Strong Bank Earnings

U.S. stocks saw significant gains, with core inflation data coming in lower than expected and major banks reporting strong earnings. All three major indexes, S&P 500, Nasdaq Composite, and Dow Jones, reported their largest daily percentage gains in over two months. The Fed looks cautiously at future policies.

On Wednesday, U.S. stocks experienced a notable surge, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all posting their largest daily percentage gains in over two months. This rally was fueled by unexpected December core inflation data and strong earnings from key U.S. banks.

The Labor Department's report revealed a significant rise in the consumer price index, primarily due to increased energy costs, while underlying inflation pressures came in lower. The market also reacted positively to the producer price index data, which rose less than anticipated, calming investor fears about interest rates.

With the Federal Reserve monitoring the situation, expectations for interest rate cuts increased, alongside a successful performance from large banks like JPMorgan and Wells Fargo. Meanwhile, geopolitical relief came as a phased deal signaled an end to the prolonged conflict in Gaza.

(With inputs from agencies.)