U.S. markets recorded a fourth straight day of gains Wednesday, Feb. 14, amid news that consumer prices rose higher than expected in January.
The consumer price index rose 2.1% on an annual basis in January for the second month in a row, according to data released by the U.S. Department of Labor, while core CPI, which excludes food and energy, was up 1.8%, the same as in December 2017. Consensus expectations had been for headline CPI to moderate to 1.9% and core CPI to drop to 1.7%. The data could lead to additional rate hikes and a faster reduction of the Federal Reserve's balance sheet, according to economists.
However, investors appeared to shake off inflation woes.
The SNL U.S. Bank Index added 2.50% to 646.05, and the SNL U.S. Thrift Index gained 1.33% to 947.27. The Dow Jones Industrial Average gained 1.03% to 24,893.49, the S&P 500 rose 1.34% to 2,698.63 and the Nasdaq Composite Index increased 1.86% to 7,143.62.
"I think people are starting to get their heads around the fact that inflation is starting to push up," Kevin Nicholson, chief market strategist at RiverFront Investment Group, said. "They've had some time to think about it."
"I think we really have to keep an eye on what the 10-year does," he added. "I think as yields go higher, that's obviously going to create some volatility."
The nation's biggest banks ended the day in the green as Bank of America Corp. expanded 2.63% to $32.00, Citigroup Inc. added 2.04% to $76.71, JPMorgan Chase & Co. rose 2.31% to $115.03 and Wells Fargo & Co. gained 2.67% to $59.55.
Among other notable movers, Popular Inc. increased 3.62% to $41.20 after announcing that its subsidiary Banco Popular de Puerto Rico will acquire $1.5 billion in retail auto loans and $340 million in commercial loans from Wells Fargo subsidiaries Reliable Financial Services Inc. and Reliable Finance Holding Co.
Hilltop Holdings Inc. gained 3.70% to $25.20 after the Dallas-based company announced it is buying Bank of River Oaks for $85 million in cash.
Eagle Bancorp Inc. rose 3.81% to $62.65 on Wednesday, United Community Banks Inc. expanded 3.63% to $31.65, CIT Group Inc. added 4.45% to $53.53 and First Republic Bank rose 4.37% to $95.15.
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