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 effects.
The Dow Jones Industrial Average closed up 268.91 points, or 0.80%, at 33,973.01. The S&P 500 gained 1.28% to end at 3,969.61. The Nasdaq Composite led the indexes for another day, adding 1.76%, to close at 10,931.67.
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 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.”
Wednesday brought the first four-day rally for the Nasdaq since September. The index has climbed this week as investors pick up beaten-down technology stocks, which they expect to fare better if the Fed eases on its rate-hiking campaign.
“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.”
It was also a big day for meme stocks, punctuated by a 68% gain in Bed Bath & Beyond.
After CPI, investors will follow big bank quarterly results on Friday, which kick off a new earnings season.
