Markets celebrate cool CPI, and bank earnings

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Core CPI below estimates
The US consumer price index rose a seasonally adjusted increase 0.4% on the month in December, putting the 12-month inflation rate at 2.9%, the US Bureau of Labor Statistics. reported Wednesday. Core inflation, which excludes food and energy prices, rose 0.2% on a monthly basis and 3.2% for the year. The annual reading decreased by 0.1 percentage points from November. Both core readings were also 0.1 percentage points below expectations.

Ceasefire agreement between Israel and Hamas
Israel and Hamas on Wednesday reached an agreement to cease fire and release hostages to finish a 15 month war in the Gaza Strip. The Israeli security cabinet must also vote on the agreement before its implementation. If approved, the first phase of the agreement will include a complete ceasefire and the withdrawal of Israeli forces from populated areas of the Gaza enclave, US President Joe Biden said.

Markets are enjoying their best day in months
the stocks of the United States popped up on wednesday for its best day since November, on the back of a cooler-than-expected inflation reading and Treasury yields are rising. The Pan-European Stoxx 600 Index added 1.33%, snapped a three-day losing streak and clocked its best performance since August. British government bond yields fell sharply after the official data shown UK inflation falls to 2.5% in December.

JPMorgan Chase shoots past earnings estimates
JPMorgan Chase posted to massive earnings beat for its fourth quarter. The bank’s profit rose 50% to $14 billion in that period and revenue climbed 10% to $43.74 billion. That’s thanks to net interest income of $23.47 billion, beating StreetAccount’s estimate by nearly $400 million. JPMorgan executives said the bank will enhance share purchases even as CEO Jamie Dimon in May called the stock expensive.

Goldman Sachs almost doubles profits
Goldman Sach fourth quarter earnings beat estimates on business revenue stronger than expected. The bank said profit nearly doubled from a year earlier to $4.11 billion and revenue jumped 23% to $13.87 billion. “There was a a significant change in CEO confidenceespecially after the results of the US election,” CEO David Solomon said in a conference call on Wednesday.

(PRO) Earnings to be cautious about next week
About 7% of the companies in the S&P 500 The index is set to report earnings next week. CNBC Pro took a look at the companies reporting earnings next week, looking for the ones that analysts are still downbeating, and found six companies that had Earnings estimates revised downward in the last three months.

Indeed, like CNBC’s Jeff Cox noticed“Most of the higher movement in the CPI came from a 2.6% gain in energy prices for the month, pushed higher by a 4.4% surge in gasoline. That was responsible for about 40% of the earnings index, according to the BLS.”

“Today’s CPI number takes additional rate hikes off the table, which some market participants were starting to price in prematurely,” said John Kerschner, head of U.S. secured products and portfolio manager by Janus Henderson Investors.

U 10-year US Treasury yield fell sharply, and is now 4.655%, compared to the end of last Friday of 4.774%, as traders moderate their expectations of interest rates.

That gave the stocks room to breathe. U S&P 500 jumped 1.83%, the Dow Jones Industrial Average went up 1.65% and the Nasdaq Composite rose 2.45%. It was the best day for all three major media outlets since November 6.

Upbeat earnings reports from banks also added to the cheer. Their financial results often serve as a forecast for the general direction of the economy: banks’ toplines grow when businesses and consumers engage in more financial activity, which, in turn, helps to grow the economy.

For investors, the stars aligned on Wednesday. But as the skies are constantly changing, volatility, in the form of a new administration and US policies, remains.

— CNBC’s Jeff Cox, Hakyung Kim and Lisa Kailai Han contributed to this report.