Dow Lifts Ahead of Inflation Data, Oil on a Tear, Bitcoin Inches Higher—and What Else Is Happening in the Stock Market Today

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Federal Reserve Chair Jerome Powell has said the Fed will act against inflation. Today’s inflation data may see a 40-year high.

Brendan Smialowski-Pool/Getty Images

Stocks were rising Wednesday ahead of key U.S. inflation data, with economists predicting the highest year-over-year rise in inflation in 40 years.

Futures for the Dow Jones Industrial Average indicated an open 50 points or 0.1% higher, after the index rose 183 points Thursday to close at 36,252. The S&P 500 and Nasdaq were on track for a similar start.

Overseas, London’s FTSE 100 rose 0.8%—capturing the highest levels seen since the Covid-19 crash of late February 2020—while in Hong Kong the Hang Seng Index surged 2.8%. International markets were buoyed by Wall Street’s late rally Wednesday, which followed Senate testimony from Federal Reserve Chair Jerome Powell at his confirmation hearing for a second term at the head of the central bank.

Powell’s confidence in the U.S. economy and message that the Fed would act to curb high inflation has soothed investors’ nerves—spurring a buying streak. His words came after recent concerns in the market about tighter monetary policy. Last week, signals suggested the Fed was heading for earlier, faster interest-rate increases—maybe three this year, with the first in March—and an eventual reduction of its balance sheet.

Helping Wednesday’s rally—especially in bond yield-sensitive tech stocks—was an easing off among long-duration Treasury yields, which had spiked. The yield on the benchmark 10-year U.S. note came down from its pandemic-era high of 1.8% and was hovering below 1.75% Wednesday; it began 2022 around 1.53%.

“The more positive tone appears to have come about as a result of the inability of U.S. treasury yields to build on their recent gains, after Powell insisted that while the Fed was going to start the ball rolling on a normalization process, that it would be a long process from where we are now,” said Michael Hewson, an analyst at broker CMC Markets. 

In the day ahead, all eyes will be on U.S. consumer-price inflation (CPI) data for December, which is a key measure of inflation. Estimates are for a year-over-year increase of 7%, which would be the highest annual CPI print since 1982.

“Repeated upside surprises in the inflation data have sent the year-on-year numbers up to multidecade highs, putting significant pressure on the Fed,” said Jim Reid, a strategist at Deutsche Bank . “Indeed if you look at the monthly headline CPI reading, seven of the last nine releases have come in above the consensus estimate.”

Hewson said that the CPI data “could well once again spark volatility, if we get a number well north of 7%.”

Write to Jack Denton at jack.denton@dowjones.com