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Wall St climbs on megacap boost; inflation and earnings in focus.

By Johann M Cherian and Ankika Biswas | Investing.com

© Reuters. FILE PHOTO: People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo


(Reuters) - Wall Street's main indexes climbed in choppy trading on Wednesday, underpinned by strength in some megacaps, while caution ahead of inflation reports and big bank earnings later in the week kept investor sentiment in check.


Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN) rose between 0.4% and 1.4%, as yield on the benchmark 10-year note inched lower ahead of a highly anticipated government bond auction. [US/]


Megacap stock Nvidia (NASDAQ:NVDA) also gained 2.1% to hit a record high after TSMC, the world's largest contract chipmaker, beat fourth-quarter revenue expectations.


Communication services stocks led sectoral gains by 0.7%, steered by a 3.1% advance in Meta Platforms (NASDAQ:META) to over a two-year high.


Gains in equities have remained limited since the turn of the year as expectations of early rate cuts, which had driven much of the rally towards the end of 2023, scaled down following contrasting economic data and mixed signals from Federal Reserve officials.


All eyes are now on the December consumer and producer inflation reports, due on Thursday and Friday, respectively, which could help determine the monetary policy trajectory for the central bank.


Investors will also closely monitor comments by New York Fed President John Williams, who is scheduled to speak later in the day.


Skyler Weinand, chief investment officer, Regan Capital believes any strong surprise on the inflation front may cause bond and equities to sell off.


Market participants have scaled back expectations for at least a 25-basis-point rate cut in March, and currently see a near 67% chance, down from around 86% in the final week of 2023, as per the CME FedWatch Tool.


On Friday, banking giants JPMorgan Chase (NYSE:JPM), Bank of America, Citigroup and Wells Fargo are expected to report lower fourth-quarter profits.


"Banks are going to be in a very large hole for at least the next two years, unless yields drop tremendously," Weinand added.


The lenders slipped between 0.8% and 1.0% on Wednesday, pushing the S&P 500 bank index to a one-week low.


At 11:36 a.m. ET, the Dow Jones Industrial Average was up 32.42 points, or 0.09%, at 37,557.58, the S&P 500 was up 6.87 points, or 0.14%, at 4,763.37, and the Nasdaq Composite was up 39.59 points, or 0.27%, at 14,897.30.


Crypto stocks including Coinbase (NASDAQ:COIN), Bitfarms and Riot Platforms (NASDAQ:RIOT) shed over 2.1% each, as Bitcoin prices dipped after the U.S. securities regulator said a fake social media message was posted on its account regarding the eagerly awaited approval of exchange traded funds.


Boeing (NYSE:BA) rose 1.3%, recovering from a 9.3% tumble in the last two sessions. CEO Dave Calhoun acknowledged errors by the U.S. planemaker as more than 170 jets remained grounded for a fourth day.


DocGo dropped 34.1% after Fuzzy Panda Research revealed short position on the health services company's stock.


Advancing issues outnumbered decliners by a 1.07-to-1 ratio on the NYSE and for a 1.39-to-1 ratio on the Nasdaq.


The S&P index recorded 23 new 52-week highs and no new lows, while the Nasdaq recorded 52 new highs and 68 new lows.

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