Stocks rose Wednesday as investors grew increasingly confident Thursday’s consumer price index will show cooling inflation and signal to the Federal Reserve that previous interest rates hikes have had their intended impacts.
The Dow Jones Industrial Average advanced 220 points, or 0.7%. The S&P 500 gained 1%, while the Nasdaq Composite added 1.4%.
Economists polled by Dow Jones expect the CPI to show prices cooled by a modest 0.1% in December from the prior month. The forecast still calls for a 6.5% increase from the prior year. Excluding food and energy prices, economists expect the CPI for December will be 0.3% higher than the prior month and 5.7% higher than a year ago.
Bond yields also pulled back as investors readied for the report.
“It’s really all today about about kind of positioning ahead of head of CPI,” said Daniel Eye, chief investment officer at Fort Pitt Capital Group. “You’re trying to get in there ahead of a big, big move on the report tomorrow.”
The Nasdaq clinched its first three-day winning streak since November on Tuesday as investors picked up beaten-down technology stocks, which market observers expect to perform better with smaller interest rates. A positive close on Wednesday would mark the Nasdaq’s first four-day rally since September.
“As we get closer to the end of this interest rate hike campaign that the Fed is doing, tech stocks should rally,” said Gina Bolvin, president of Bolvin Wealth Management Group. “Let’s just face it: Last year they got creamed, so there are investors that want to pick up some bargains.”
Big bank quarterly results will follow on Friday, kicking off a new earnings season.