NEW YORK (AP) — U.S. stocks ripped higher Wednesday following a shot of adrenaline from an encouraging update on U.S. inflation. Strong profit reports from Wells Fargo and other big U.S. banks also helped launch indexes to their best day in two months.
The S&P 500 jumped 1.8%. The Dow Jones Industrial Average rallied 703 points, or 1.7%, and the Nasdaq composite leaped 2.5%.
Treasury yields also eased in the bond market following the update on how much more U.S. households had to pay in December for eggs, gasoline, housing and other costs of living. The report said overall inflation accelerated to 2.9% from 2.7% in November.
While no one wants higher inflation, the numbers were more encouraging underneath the surface. After ignoring prices for food and energy, which can zigzag sharply from month to month, underlying inflation trends slowed to 3.2% in December. Economists had thought it would remain at 3.3% for a fourth straight month, according to FactSet.
The Federal Reserve pays more attention to that underlying number than the overall figure, and it’s particularly welcome following worries that improvements in inflation have halted and that it will be tough to get all the way down to the Fed’s 2% target.
Few traders expect Wednesday’s data to convince the Fed to cut its main interest rate at its meeting later this month, as it’s done at three straight meetings since September. But economists and analysts say it could open the door for cuts later in the year, maybe even in March, if more data comes in to show that upward pressure on inflation is abating.
“Perhaps the key takeaway is that markets are likely to be whipsawed over the next few data releases as investors seek a narrative that they can be comfortable with for more than just a few days at a time,” said Seema Shah, chief global strategist at Principal Asset Management.
Wall Street has been lurching down and up for weeks as traders tear up their forecasts for what the Fed will do with interest rates in 2025. A further easing would boost the U.S. economy and prices for investments, but it could also give inflation more fuel.
Traders were ebullient last year about the possibility of a string of cuts to rates, when they sent stocks to dozens of all-time highs, only to rein in their expectations more recently. The Fed itself has indicated it may cut rates only two times this year instead of the four it had earlier projected, and some traders have even considered the possibility of future hikes to rates.
Wednesday’s update quashed speculation about hikes in the near term, and Treasury yields eased in the bond market on growing hopes for coming cuts. The yield on the 10-year Treasury dropped back to 4.65% from 4.79% late Tuesday, which is a considerable move. It had largely been screaming higher since September, when it was below 3.65%.
The two-year Treasury yield, which more closely tracks expectations for the Fed’s upcoming actions, fell to 4.26% from 4.37%.
On Wall Street, bank stocks helped lead the way after several reported stronger profits for the last three months of 2024 than analysts expected.
Wells Fargo jumped 6.7%, Citigroup rallied 6.5% and Goldman Sachs gained 6%. They’re among the first big U.S. companies to report their results for the end of 2024, and even more focus may be on them than usual.
When Treasury yields are climbing and bonds are paying more in interest, it cranks up the pressure on stock prices by peeling investors away from stocks and into bonds. To make up for it, stock prices typically either have to fall or corporate profits have to rise more strongly.
Stocks of companies that would get a big benefit from lower interest rates were also toward the front of the market.
Builders FirstSource, a supplier of countertops and other building materials, rose 4.7%, for example. It and other housing-related companies would get a boost from easier mortgage rates.
All told, the S&P 500 rose 107.00 points to 5,949.91. The Dow Jones Industrial Average gained 703.27 to 43,221.55, and the Nasdaq composite jumped 466.84 to 19,511.23.
The encouraging U.S. inflation data also helped to perk up stock indexes abroad by lowering the pressure on the global bond market.
The FTSE 100 in London rallied 1.2%. U.K. markets have been under pressure because of a jump in bond yields amid worries about a sluggish economy and the country’s finances.
Indexes also rose 0.7% in France and 1.5% in Germany. They were more subdued in Asia, where trading closed before the release of the U.S. inflation data.
South Korea’s Kospi was nearly unchanged after law enforcement officials detained impeached President Yoon Suk Yeol on Wednesday in connection with his failed declaration of martial law last month.
AP Writer Zimo Zhong contributed.
FILE - People walk in front of Tokyo Stock Exchange building in Tokyo, Dec. 25, 2024. (AP Photo/Eugene Hoshiko, File)
Trader Jonathan Mueller works on the floor of the New York Stock Exchange, Monday, Jan. 13, 2025. (AP Photo/Richard Drew)
FILE - A person looks at an electronic stock board showing Japan's Nikkei index at a securities firm in Tokyo, Dec. 23, 2024. (AP Photo/Eugene Hoshiko, File)
WASHINGTON (AP) — When acting Attorney General Todd Blanche signed off on a nearly $1.8 billion fund meant to compensate President Donald Trump's allies for alleged political prosecution, he may have pleased his boss.
But the eyebrow-raising move — the latest in his push to prove his loyalty to Trump — has agitated the same Republican lawmakers he would need to secure the permanent job.
Blanche insists he’s not auditioning for the job of attorney general. But a succession of splashy steps the Justice Department has taken under his watch since he took the position on an acting basis last month, including an indictment of former FBI Director James Comey, has left no doubt about the impression he’s hoping to make on the president who appointed him.
The fund in particular has put Blanche at the center of a Republican firestorm at a time when he aims to establish himself as the perfect person for the job for the remainder of Trump’s term. And it sharpened concerns from Democrats and other Blanche critics that he has not shed his mantle as the president’s personal attorney.
“So the nation’s top law enforcement official is asking for a slush fund to pay people who assault cops? Utterly stupid, morally wrong — Take your pick,” Republican Sen. Mitch McConnell of Kentucky, the former majority leader, said in a statement.
A former federal prosecutor in New York, Blanche came to public prominence for his lead role on Trump's defense team, including during the Republican's hush money trial in New York. That perch afforded him, he has said, a firsthand look at what he contends was the weaponization of the criminal justice system against Trump.
He was brought into the Justice Department as deputy attorney general, the No. 2 job, then was elevated last month after Trump ousted Pam Bondi.
Now he finds himself the latest Trump-appointed attorney general to simultaneously confront expectations from subordinates to uphold institutional norms and demands from the president to do his bidding.
Trump's first attorney general, Jeff Sessions, was forced out after the 2018 midterms after infuriating the president over his recusal from an investigation into ties between Russia and the 2016 presidential campaign. Another, William Barr, resigned after their relationship fizzled over Barr's refusal to back Trump's baseless claims of massive election fraud. Bondi was removed after struggling to bring successful prosecutions against Trump's political opponents.
Two weeks after becoming acting attorney general, Blanche announced the appointment of Joseph diGenova, an 81-year-old former Justice Department prosecutor from the Reagan administration, to a special position inside the department. He'll oversee a Florida-based investigation into whether former law enforcement and intelligence officials conspired over the last decade to undermine Trump.
“At some point, at the right time, that will be made public and the American people will see exactly what happened to this administration and President Trump over the past decade," Blanche told Fox News.
Prior government reviews of the FBI's Trump-Russia investigation, a centerpiece of the current conspiracy investigation, have failed to produce criminal charges against senior officials or evidence of criminal conduct by them. It's not clear what, if any, new information the continuing investigation has developed.
The Justice Department also last month obtained an indictment charging Comey, a Trump foe whose prosecution the president has long called for, with threatening Trump through a social media photo of seashells in the numerical arrangement of “86 47" — a case legal experts say will be challenging for prosecutors. Comey has said he wouldn't be surprised if the Justice Department pursues additional indictments.
In other moves, Blanche announced an indictment of the Southern Poverty Law Center, a nonprofit that has been the target of conservative outrage, with misleading donors about its activities, and has publicly defended a Justice Department crackdown on leaks to the news media, including subpoenas to reporters.
Arguably the most audacious demonstration of loyalty to Trump came this week when the Justice Department announced the creation of a $1.776 billion fund to compensate people who feel they've been unjustly investigated and prosecuted, coupled with a guarantee of immunity from tax audits for Trump and his eldest sons.
As Republican concerns grew, Blanche held a tense meeting with GOP lawmakers Thursday. Shortly afterward, Senate Republicans abruptly left Washington without voting on a roughly $70 billion bill to fund immigration enforcement agencies.
Blanche, who defended the fund at a congressional hearing this week, has said anyone who believes they've been persecuted can apply for compensation regardless of political affiliation. But the fund has been widely understood as a boon to Trump allies investigated during the Biden administration.
“It’s pretty clear that he’s not the attorney general for the United States as much as he's the attorney general for President Trump,” said Stephen Saltzburg, a George Washington University law professor and senior Justice Department official in the 1980s. He said Blanche would get an A+ if report cards were issued for fealty to Trump.
David Laufman, a former chief of staff to the deputy attorney general in President George W. Bush's administration, said that rather than protecting the Justice Department's independence, Blanche has been a “willing and ardent accomplice for carrying out any partisan or corrupt scheme the White House may devise.”
Blanche’s supporters dismiss the suggestion he is trying to curry favor with Trump to secure the permanent job.
“What he is doing is he is seeking justice based on facts and the law,” said Jay Town, who served as a U.S. attorney in Alabama during the first Trump administration. “And I don’t think that will ever change about him, whether he is the attorney general going forward or doesn’t spend another day in the administration. He is an honorable man and anybody that knows him knows that to be true.”
Blanche also says he is not angling to keep his job or feeling pressure to placate Trump.
He has told reporters he would be honored to be nominated but, "if he chooses to nominate somebody else and asks me to go do something else, I will say, ‘Thank you very much. I love you, sir.’ I don’t have any goals or aspirations beyond that.”
In recent days, he's functioned as the fund's public face and most visible defender, a role consistent with his comfort in the spotlight. He sometimes holds multiple press conferences a week and grants interviews to a variety of news outlets, a contrast to Bondi, who largely stuck to Fox News appearances.
His defenders say his experience as a federal prosecutor has made him a more sophisticated communicator for the department than Bondi, but his statements have at times invited backlash, including his refusal to rule out that violent Jan. 6 rioters could be eligible for payouts.
Though Blanche will appoint the five commissioners tasked with processing claims, his precise role in the fund’s implementation is unclear. He told CNN it was developed through negotiations with Trump’s private lawyers, not him.
For some Democrats, that's a difference without a distinction.
“Mr. Attorney General, you are acting today like the president's personal attorney," Sen. Chris Van Hollen, a Maryland Democrat, told Blanche during a combative exchange in a Senate hearing, "and that's the whole problem."
Acting Attorney General Todd Blanche arrives for a closed-door meeting with Republican senators who are expected to abandon a proposal for $1 billion in security money for the White House complex and President Donald Trump's ballroom after it has failed to win enough party support, at the Capitol in Washington, Thursday, May 21, 2026. (AP Photo/J. Scott Applewhite)
Acting Attorney General Todd Blanche arrives for a closed-door meeting with Republican senators who are expected to abandon a proposal for $1 billion in security money for the White House complex and President Donald Trump's ballroom after it has failed to win enough party support, at the Capitol in Washington, Thursday, May 21, 2026. (AP Photo/J. Scott Applewhite)
