Stock Market Update

[BRIEFING.COM] The stock market rallied following pleasing inflation data in the form of the December Consumer Price Index (CPI) report. The S&P 500 (+1.8%) traded above its 50-day moving average (5,957) at its session high before closing shy of that key technical level. 

The CPI report reflected a drop in the year-over-year rate in core-CPI to 3.2% from 3.3%. The 10-yr yield, which is most sensitive to changes in inflation, settled 14 basis points lower at 4.65% and the 2-yr yield settled ten basis points lower at 4.26%. The 30-yr bond yield, which settled just below 5.00% yesterday, declined 11 basis points from yesterday to 4.88%.

Broad-based buying interest in the stock market was also supported by solid earnings results from influential names in the financial sector, along with short-covering activity that drove additional buying in the bond market, too. 

JPMorgan Chase (JPM 252.35, +4.88, +2.0%) and Citigroup (C 78.27, +4.77, +6.5%) were among the top performing names in the financial space, reaching fresh 52-week highs after better-than-expected earnings. 

The S&P 500 financial sector benefitted from the positive responses to earnings results, gaining 2.6% compared to yesterday's close. The consumer discretionary (+3.0%), communication services (+2.7%), and information technology (+2.2%) sectors were also top performers, reflecting rebound action in the mega cap space. 

The defensive-oriented consumer staples (-0.1%) and health care (+0.2%) sectors were at the bottom of the lineup among the 11 sectors. 

• S&P Midcap 400: +2.6% YTD
• Dow Jones Industrial Average: +1.6% YTD
• Russell 2000: +1.5% YTD
• S&P 500: +1.2% YTD
• Nasdaq Composite: +1.0% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 33.3%; Prior -3.7%
• December CPI 0.4% (Briefing.com consensus 0.3%); Prior 0.3%, December Core CPI 0.2% (Briefing.com consensus 0.2%); Prior 0.3%
  • The key takeaway from the report for a market worried about inflation heating up again is that these results were better than feared which, at first blush, shrouded the reality that the consumer inflation rate is still running well above the Fed's 2% target (albeit a target tied to the PCE Price Index).
• January Empire State Manufacturing -12.6 (Briefing.com consensus -2.0); Prior was revised to 2.1 from 0.2

Looking ahead to Thursday, market participants receive the following economic data:

• 8:30 ET: December Retail Sales (Briefing.com consensus 0.5%; prior 0.7%), Retail Sales ex-auto (Briefing.com consensus 0.5%; prior 0.2%), weekly Initial Claims (Briefing.com consensus 212,000; prior 201,000), Continuing Claims (prior 1.867 mln), January Philadelphia Fed survey (Briefing.com consensus -6.0; prior -16.4), December Import Prices (prior 0.1%), Import Prices ex-oil (prior 0.0%), Export Prices (prior 0.0%), and Export Prices ex-agriculture (prior 0.1%)
• 10:00 ET: November Business Inventories (Briefing.com consensus 0.1%; prior 0.1%) and January NAHB Housing Market Index (Briefing.com consensus 45; prior 46)
• 10:30 ET: Weekly natural gas inventories (prior -40 bcf)