US stocks close higher as investors shake off inflation-fueled rout

• US stocks climbed on Wednesday as investors tried to recover from Tuesday's sell-off.

• The Fed's Austan Goolsbee said he's still confident inflation is on its way back down.

• Investors see a 90% chance the Fed will keep rates unchanged at its next policy meeting.

US stocks rose on Wednesday as investors tried to recover from a sell-off fueled by January's hot inflation report. All three major indexes ticked higher to end the day with a gain, while bond yields moved lower.

Stocks took a hit Tuesday after inflation came in hotter than expected for the month of January, with consumer prices rising 3.1% year-per-year, according to the Bureau of Labor Statistics.

Chicago Federal Reserve President Austan Goolsbee soothed markets' jitters a bit in remarks on Wednesday, saying inflation was still moving in the right direction, urging observers not to put too much emphasis on a single inflation reading.

"If you see inflation go up a little bit that doesn't mean that we're not on the target to get to 2%," Goolsbee said in prepared remarks at the Council on Foreign Relations on Wednesday. "We can still be on the path even if we have some increases and some ups and downs."

Still, hotter prices have dampened the market's optimism for interest rate cuts, pushing timelines out further than investors were expecting earlier in the year. Investors are now pricing in a 90% chance the Fed will keep rates unchanged at the March meeting, according to the CME FedWatch tool, up from 81% odds priced in a week ago.

Many commentators and analysts have adjusted their predictions for the first rate cut to June at the earliest following this week's inflation report.

Here's where US indexes stood at the 4:00 p.m. closing bell on Wednesday: 

• S&P 500: 5,000.62, up 0.96%

• Dow Jones Industrial Average: 38,424.27, up 0.4% (+151.52 points)

• Nasdaq Composite: 15,859.15, up 1.3%

Here's what else happened today: 

• Stocks are as overvalued as they were at the start of the 2022 bear market, "Bond King" Jeff Gundlach warns.

• There are three things the stock market needs to continue its rally in 2024, UBS says.

• China's crashing birthrate will leave millions of teachers jobless in the coming years.

• A hot economy isn't a good reason for the Fed to "drag its feet" on rate cuts, according to one former central bank economist.

• The stock market's post-crisis run can't last forever, Wharton professor Jeremy Siegel says.

• The risk of recession could flare up if the Fed waits too long to cut interest rates, top economist Mohamed El-Erian says.

In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil dropped 1.76% to $76.50 a barrel. Brent crude, the international benchmark, dipped 0.15% to $81.48 a barrel.

• Gold slipped 0.16% to $1,990.11 per ounce.

• The 10-year Treasury yield dropped five basis points to 4.263%.

• Bitcoin surged 5.28% to $51,812.

Read the original article on Business Insider