Wall Street stocks posted their biggest rise since Donald Trump won the election

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US stocks rose to their best day since Donald Trump’s election victory after data showed fundamental price pressures in the world’s largest economy easing and Wall Street banks reported strong quarterly results.

The Standard & Poor’s 500 index closed up 1.8 percent, while the Nasdaq Composite, dominated by technology stocks, jumped 2.5 percent. These gains marked the best day for stocks since November 6, the day after the US elections.

Banks were among the biggest gainers on Wednesday after several of Wall Street’s largest lenders reported big increases in quarterly profits, driven by strength in investment banking and trading. Shares of Citigroup, Goldman Sachs and Wells Fargo jumped about 6 percent.

Investors also focused on figures from the Bureau of Labor Statistics that indicated headline annual inflation rose in line with expectations to 2.9 percent in December from 2.7 percent in November.

But core inflation, which does not include volatile food and energy costs, unexpectedly fell to 3.2 percent from 3.3 percent the previous month.

Markets have fallen in recent weeks as investors reduce their expectations of interest rate cuts by the Federal Reserve in anticipation of President-elect Trump’s economic policy, which some fear will be inflationary.

“Today’s CPI should provide a boost to markets, alleviating some concern that the US is in the early stages of a second wave of inflation,” said Seema Shah, chief global strategist at Principal Asset Management.

The policy-sensitive two-year Treasury yield, which closely tracks interest rate expectations, fell 0.1 percentage point to trade at 4.27 percent, while the 10-year bond yield – a benchmark for global borrowing costs – fell 0.14 percentage point to 4.65 percent. . . Returns fall as prices rise.

The dollar’s measure fell against six counterpart currencies by 0.2 percent.

Investors were betting that the Fed would implement its first quarter-point rate cut of the year in July, compared to September before the data was published.

Fed officials have indicated they plan to take a “cautious approach” to cutting interest rates amid concerns that inflation may not fall quickly to the central bank’s 2 percent target.

Mark Cabana, head of US interest rate strategy at Bank of America, said the inflation numbers, particularly the core figure, would likely “modestly increase” the Fed’s confidence that inflation will continue to decline. But he added that policymakers may “remain generally frustrated by the slowdown in the pace of progress on the inflation front.”

Most investors and analysts believe the Fed will not cut interest rates again at its next policy meeting later this month. US central bankers have indicated in their own forecasts that they will only cut interest rates by another 50 basis points this year.

Trump, who takes office on Monday, has made bold plans to impose tariffs on a wide range of imports, implement a massive crackdown on illegal immigrants and enact sweeping tax cuts.

Economists have warned that such plans could lead to increased inflation.

“The real question mark over inflation this year is not about what the economy can do to inflation or what the trend was before the Trump administration took office,” said David Kelly, chief global strategist at JPMorgan Asset Management. “It’s what will new policies on tariffs, immigration and fiscal policies mean for inflation?”