U.S. stock futures showed little change on Wednesday night, setting the stage for a crucial day as investors look forward to gaining more insights into the state of the economy. The market's attention is focused on Thursday's economic data and earnings reports from major financial institutions. Meanwhile, the 10-year U.S. Treasury yield experienced a notable pullback from its 14-month high, signaling potential adjustments in market expectations.
Wall Street anticipates key updates on the economy with Morgan Stanley and Bank of America poised to release their earnings reports on Thursday. These releases will mark the conclusion of earnings updates from the major banks, providing further clarity on the financial sector's performance. Additionally, the December retail sales report, expected to be revealed at 8:30 a.m. ET, is projected to show a 0.5% increase, slightly down from November's 0.7% rise as per Dow Jones consensus estimates. Excluding autos, retail sales are estimated to have increased by 0.4% last month, reflecting a modest improvement from the prior reading.
In a significant day for the stock market, the Dow Jones Industrial Average surged over 700 points, or 1.65%, while the S&P 500 rallied 1.83%. The Nasdaq Composite outperformed, advancing 2.45%. The surge was driven by a combination of factors, including a moderate improvement in core inflation within December's consumer price index and robust earnings reports from big banks, which collectively spurred a risk-on rally.
"The bond market was starting to price in the risk of further hikes, and so you get this slightly softer-than-expected inflation data, which allows you to have this big relief rally, mostly in the interest rate sensitive parts of the market." – Cameron Dawson
S&P 500 futures saw a slight rise of 0.01%, while Nasdaq 100 futures dipped marginally by 0.04%. Meanwhile, Dow Jones Industrial Average futures added 21 points, or 0.05%. Bitcoin also made headlines by briefly topping $100,000 during the session, while Tesla and Nvidia experienced significant spikes of 8% and 3%, respectively.
Despite these gains, experts caution against complacency, particularly in more volatile market segments.
"Doesn't mean that we're necessarily out of the woods for things like small caps, in the volatility that they've been experiencing," – Cameron Dawson