Stock Market Today: Dow Rises, Bitcoin Rallies, Biogen Slumps

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Stocks were rising Wednesday after key U.S. inflation data, which showed the highest year-over-year rise in inflation in 40 years. Much to the delight of stock investors, the data also indicated that inflation rate may soon decline.

The

Dow Jones Industrial Average
was up 42 points, or 0.1%, in Wednesday afternoon trading. The

S&P 500
added 0.3%, and the technology-heavy

Nasdaq Composite
gained 0.4%. It was a broad rally, with the majority of the S&P 500’s components in the green.

The Consumer Price Index rose 0.5% in December from a month earlier, and the year-over-year increase surged to 7.0%, the Labor Department reported Wednesday. That annual gain is the fastest rate of inflation in the U.S. economy since mid-1982 and was in line with economists’ consensus forecast.

There’s a kernel of good news though: Chances seem fairly high that inflation is near its peak.

One reason the inflation result was so high was because of easy consumer price comparisons to December of 2020, before the White House had signed off on additional fiscal stimulus and before Covid-19 vaccines were rolled out.

Secondly, Wednesday’s result was in line with expectations, and not above. Many had wondered if the result would be above 8%, said John Kolovos, chief technical strategist at Macro Risk Advisors. “The reason markets are stable is that we didn’t get a major blow off, an 8.5%,” as an example, Kolovos said.

Another force that could push inflation down: Supply in the global economy is beginning to catch up to demand, making products more available.

The prospect of slowing inflation means that, while markets expect the Federal Reserve to lift interest rates three times this year, the chances of more are slightly slimmer. That gives more room for higher economic growth.

The bond market, for one, is reflecting as much. The 2-year Treasury yield, which forecasts the number of rate hikes in the next couple of years, remains at 0.91%, a level it has had trouble rising above in the past few trading sessions.

The 10-year Treasury yield is down to 1.72% from an intraday pandemic-era high of 1.81% hit Monday. That’s helping tech stocks gain, as those investors are banking on sizable profits many years down the line, making tech valuations particularly sensitive to changes in long-dated bond yields.

The market’s strength is also partially a continuation of Tuesday’s rally, one that was spurred by Federal Reserve Chair Jerome Powell’s comments, which did not include an indication that the Fed would necessarily lift rates faster than currently expected.

While the stock market looks optimistic Wednesday, it isn’t exactly having a party. All three major U.S. indexes pulled back from their Wednesday highs and they’re also below their all-time highs.

That’s mostly because the extent to which the Fed will tighten policy is still not fully certain. The first rate hike hasn’t even been implemented yet and it usually takes economic demand some time to change after several hikes. “There’s going to be a lag,” Kolovos said. “It’s this transition, this internal dialogue the market’s going to have on interest rates” for the moment.  

Overseas, London’s

FTSE 100
rose 0.8%—capturing the highest levels seen since the Covid-19 crash of February 2020—while the pan-European Stoxx 600 index added 0.7%.

In Hong Kong, the

Hang Seng Index
surged 2.8%. News that China’s total social financing had increased while inflation in the world’s second-largest economy had come in slower than expected helped buoy Asian markets, according to 22V’s Dennis DeBusschere. “China total social financing has hooked up and a credit impulse will follow, which should support some China levered Industrials that lagged significantly last year. It keeps an upward bias to commodity price as well,” he explains.

In commodities, oil prices consolidated gains that came in tandem with Powell’s message Tuesday. Futures contracts for West Texas Intermediate crude rose 2% to above $82.

Cryptocurrencies were also higher.

Bitcoin
—the leading crypto—rose 4% over the last 24 hours, according to data from CoinDesk, trading just below $44,000. Smaller peer

Ether
was up almost 7% across the same period to above $3,350.

Here are six stocks on the move Wednesday:

Biogen (BIIB) stock slumped 7% after the CMS said only people enrolled in trials should receive its Alzheimer’s drug. Shares of Eli Lilly (LLY), which is working on a similar drug, fell 3.2%.

DiDi Global

(DIDI) gained 2.4% on reports that it could list in Hong Kong during the second quarter of 2022.

Rocket Lab USA

(RKLB) stock jumped 6.8% after Morgan Stanley picked up coverage of the space launch startup with a Buy-equivalent rating.

Snowflake

(SNOW) stock added 2.6% after it was upgraded to the equivalent of Buy, from the equivalent of Hold, at Barclays. Shares of the software company have tumbled lately in the broaderchnology stock selloff.

Dish Network

(DISH) rose 4.1% after the New York Post reported that it is once again in talks about a merger with DirecTV, which is majority owned by

AT&T

(T). Years of such speculation have failed to result in a deal.

Write to Jack Denton at jack.denton@dowjones.com and Nicholas Jasinski at nicholas.jasinski@barrons.com