US stocks jump as investors shake off inflation data showing prices climbing at the quickest pace in 4 decades

Trader with screens on NYSE floor clapping
A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., December 28, 2021. Andrew Kelly/Reuters

US stocks closed higher on Wednesday after inflation data for December came in as expected, but still showed prices rising at the quickest pace in almost four decades.

The Consumer Price Index gained 7% year-over-year last month, in line with the median forecast of 7% given by the economists surveyed by Bloomberg. The pace reflects the strongest inflation since 1982 and marks a slight acceleration from the 6.8% year-over-year leap seen in November.

“Inflation is not slowing down just yet, but the peak is getting close,” Edward Moya, senior equity analyst at Oanda, said in a note. “Today’s inflation report does two things, it does not alter the Fed’s course for a March rate liftoff and provides no incentive for Senator Manchin to return to the Build Back Better negotiating table.”

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday:

While the CPI report revealed inflation worsened last month as the Omicron variant spread alongside continued supply chain constraints, it did little to change investors’ expectations for continued tightening from the Fed.

“The market had already priced in or even over anticipated a hawkish Fed as the comments in the minutes about quantitative tightening were just discussions and not policy,” Jay Hatfield, portfolio manager at Infrastructure Capital Advisors, said in a note.

He added that US equities are also rising in anticipation of a likely strong earnings season that will kick off at the end of the week. Delta Air Lines will report on Thursday, while big banks such as JPMorgan, Wells Fargo, and Citigroup will post results on Friday.

The 10-year Treasury note yield slipped to 1.736% from Tuesday’s 1.745% rate. The yield saw a brief spike to about 1.80% in the previous session — the highest level since before the COVID-19 pandemic. Bond yields and prices move in opposite directions.

In cryptocurrencies, sales of non-fungible tokens hit $592 million over the past week. But as the frenzy continues, so have the scams. The developers of an NFT collection called Frosties vanished in a potential “rug pull” after buyers put in $1.3 million.

Still, the space continues to attract newcomers, such as Grammy-nominee Akon who said he will sell his next album as an NFT to “monetize it from the day it drops.” And Gap is launching its first-ever NFT line that it has dubbed a “gamified” experience.

Oil prices ticked up after oil inventories tumbled to their lowest level since October 2018.

West Texas Intermediate crude oil rose 1.80% to $82.68 per barrel. Brent crude, oil’s international benchmark, jumped 1.10% to $84.64 per barrel.

Gold rose 0.31% to $1,826.58 per ounce.