Stock Market Climbs Even As Inflation Runs At Hottest Pace In 40 Years; Financial Stock Breaks Out

The stock market took in stride the news of another spike in inflation, as the major indexes extended the week’s rebound.


Stock market indexes held near session highs around 10 a.m. ET. The Nasdaq composite climbed 0.7% and the S&P 500 0.5%.

The Dow Jones Industrial Average added 0.4%. Microsoft (MSFT) gapped up to a gain of more than 1% as it tries to bounce back from its new year’s slide.

The Russell 2000 climbed 0.1%. Volume rose on the NYSE and Nasdaq compared with the same time on Tuesday.

Stock Market Up Despite Inflation Data

The U.S. consumer price index jumped 7% in December from a year ago, the fastest pace since 1982. The core price index, which excludes food and energy costs, surged 5.5% in December from a year earlier. That was the highest rate since 1991.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 36412.48 +160.46 +0.44
S&P 500 (0S&P5) 4738.46 +25.39 +0.54
Nasdaq (0NDQC ) 15260.92 +107.47 +0.71
Russell 2000 (IWM) 217.90 +0.29 +0.13
IBD 50 (FFTY) 42.96 +0.70 +1.66
Last Update: 10:10 AM ET 1/12/2022

Consumer prices climbed a seasonally adjusted 0.5% in December from November, as the pace slowed from October and November, the Labor Department reported.

Brian Price, head of investment management for Commonwealth Financial Network, said that while the CPI comes as a shock to many, the increase was largely anticipated. That’s reflecting in the bond market, where longer-term interest rates are declining so far this morning.

The 10-year Treasury note’s yield eased 2 basis points to 1.73%.

“We’re still seeing the effects of supply chain issues resulting in higher prices for a variety of goods and it remains to be seen if these pricing pressures will start to moderate as we move through 2022,” Price said in a note.

John Lynch, chief investment officer for Comerica Wealth Management, said the trends in pricing and rates favor value stocks, with an emphasis on cyclical sectors. Those “offer attractive relative valuations, strong margins and pricing power as earnings season begins,” he said. Comerica’s favorite sectors include Energy, Materials, Industrials and Financials.

IBD 50 Outperforms Stock Market

Innovator IBD 50 ETF (FFTY) rose 1.7%, vastly outperforming the broad stock market.

Houlihan Lokey (HLI) rose past the 119.99 buy point of a cup without handle base, according to MarketSmith pattern recognition. Early volume was heavy, and the relative strength line is near new highs.

Western Alliance Bancorp (WAL) is quite close to a breakout at 124.98, so watch that stock in today’s trading.

KLA (KLAC) rose 1.8% as it climbs from a pullback to the 50-day moving average. Arista Networks (ANET) also is finding support at its 50-day line.

But Jefferies Financial (JEF) plunged 9% in heavy trading after the investment bank’s earnings and revenue missed estimates. Revenue fell 3% for the November-ended quarter. Jefferies also raised its dividend by 20% to 30 cents a share.

Asian Stock Markets Rally

Chinese stocks extended a rebound after Asian indexes posted solid gains. The Hong Kong Hang Seng Index surged 2.8%, the best day since Oct. 7, according to Dow Jones Market Data. The Shanghai Composite rose 0.8%, while the Tokyo Nikkei 225 added 1.9%, ending a three-day losing streak.

A number of Chinese ADRs and ETFs are bouncing back this week after slumping for nearly a year. Investors appear to be warming up to Chinese stocks, given lower valuations and less regulatory action from Beijing, The Wall Street Journal reported.

KraneShares CSI China Internet (KWEB) is up more than 6% this week, although still more than 60% below prior highs. The iShares China Large Cap ETF (FXI) added more than 2%, reclaiming its 50-day moving average. (JD) soared more than 10% Tuesday after a day of mixed analyst comments on the Chinese online retailer. Wednesday morning, the stock rose nearly 2% and regained its 50-day line.


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