By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks surged on Wednesday, with all three major indexes registering their biggest daily percentage gains in more than two months, as the lowest Expected December inflation data and strong earnings from major US banks fueled a rally.

The Labor Department said the consumer price index (CPI) rose the most in nine months as energy costs rose, although a measure of underlying inflationary pressures eased.

Data on Tuesday showed that the producer price index (PPI) rose less than expected.

“We are very sad about the fact that prices can go up and it will be a problem and the UK can’t borrow money and oh, our deficit, and so everyone is injured,” said Stephen Massocca, senior vice president of Wedbush Securities. in San Francisco.

“The CPI number and the PPI number – they’re not super cool, but they’re certainly not hot – and it certainly leads one to believe that the inflationary pressures are dying.”

It rose 703.27 points, or 1.65%, to 43,221.55, gained 107.00 points, or 1.83%, to 5,949.91 and advanced 466.84 points, or 2.45%, to 19,511.23.

All three major indexes scored their biggest daily percentage gains since November 6, as did the domestically focused index of small-cap stocks, which rose 1.99%.

Stocks struggled after the US post-election rally, with the S&P 500 falling four times in the past five weeks. A strong economy, declining inflation and comments from Federal Reserve policymakers have fueled concerns about the central bank being less aggressive in cutting interest rates than it has been in the past. expected.

Concerns remain about potential tariffs from the incoming administration of President-elect Donald Trump that will further fuel inflation.

But expectations for further Fed rate cuts this year rose after the CPI data, with possibilities for a cut of at least 25 basis points at the June Fed meeting.

Fed officials said Wednesday that recent inflation data would be helpful but noted uncertainty in the coming months as they await policies from the incoming Trump administration.

The Fed’s Beige Book shows economic activity rose slightly to moderate in late November and December, with employment ticking up and prices moderately rising amid concerns about the potential impact of the Trumpet policy.

The benchmark Treasury note yield fell from a 14-month high of 4.809% hit earlier this week and last fell 13.7 basis points to 4.651%.

Also lending support were earnings from big banks, with JPMorgan shares rising 1.97% to a record annual gain as markets rebounded in the fourth quarter. Wells Fargo (NYSE: ) jumped 6.69% after its fourth-quarter profit beat Street expectations as a surge in dealmaking activity boosted its investment banking business.

Goldman Sachs, which rose 6.02%, was the biggest gainer of the Dow Industrials as it gave about 214 points of increase, after its best quarterly profit since the third quarter of 2021. Citigroup (NYSE: ) rose 6.49% after it grew to fourth-quarter earnings. The S&P 500 banking index rallied 3.37%.

Relief also came from the long-awaited phased deal to end the war in Gaza after 15 months of conflict.

The increase in issues is the number of decliners in a 5.49-to-1 ratio in the NYSE, and in a 3.19-to-1 ratio in the Nasdaq.

The S&P 500 posted 20 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 60 new highs and 92 new lows.

The volume of US exchanges was 14.26 billion shares, compared to the 15.81 billion average for the entire session in the last 20 trading days.