After initially moving to the downside, stocks moved sharply higher over the course of the trading session on Wednesday. With the strong upward move on the day, the major averages added to the gains posted in the three previous sessions.
The major averages ended the session near their best levels of the day. The Dow jumped 253.04 points or 1 percent at 24,893.49, the Nasdaq soared 130.10 points or 1.9 percent to 7,143.62 and the S&P 500 surged up 35.69 points or 1.3 percent to 2,698.63.
Stocks initially moved lower following the release of a report from the Labor Department showing a bigger than expected increase in consumer prices in the month of January.
The Labor Department said its consumer price index climbed by 0.5 percent in January after edging up by a revised 0.2 percent in December.
Economists had expected consumer prices to rise by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.
Excluding food and energy prices, core consumer prices rose by 0.3 percent in January after inching up by 0.2 percent in December. Core prices had been expected to increase by 0.2 percent.
Compared to the same month a year ago, consumer prices were up by 2.1 percent in January, while core consumer prices were up by 1.8 percent.
“Once temporary factors drop out of the annual comparison in the spring, core CPI inflation will be close to 2.5% and we expect it to trend higher from there,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “We expect that will force the Fed to raise rates a total of four times this year, beginning with a 25bp rise in interest rates at the March FOMC meeting.”
A separate report from the Commerce Department showed an unexpected decrease in retail sales in the month of January.
The Commerce Department said retail sales fell by 0.3 percent in January compared to economist estimates for a 0.2 percent uptick in sales.
Revised data showed that retail sales were unchanged in December compared to the…