By Yasin Ebrahim
Investing.com -- The S&P 500 advanced Wednesday, led by consumer stocks just a day ahead of data expected to show inflation cooled further in December.
The S&P 500 rose 1%, the Dow Jones Industrial Average gained 0.55%, or 185 points, and the Nasdaq Composite climbed 1.4%.
Following recent data pointing to cooling inflation including easing wage pressures seen in the December jobs report, investors are “looking for further news showing inflation is headed lower in the CPI data,” Wells Fargo said in a note ahead of the consumer price index report due Thursday.
Economists are expecting that the consumer price index to ease to 6.5% in December year-on-year from 7.1%, supported by lower car prices, oil prices, and rent prices.
Expectations for further signs of easing inflation pressures have buoyed expectations for a less hawkish Fed.
Consumer discretionary stocks led the gains in the broader market as Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) racked up gains, with the latter announcing plans to expand its electric vehicle factory in Texas. The move comes in the wake of demand worries after Tesla recently cut prices on EVs in China, a key market for the EV maker.
Travel and hospitality stocks also boosted consumer stocks, with Expedia (NASDAQ:EXPE) rallying 5% after Oppenheimer upgraded the travel company to outperform from perform as “customer services efficiency improvements and successful cost cutting execution,” are expecting to boost margins.
Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), meanwhile, rose more than 2% and 3%, respectively to lead big tech higher. Microsoft’s reported interest in investing in artificial intelligence start-up OpenAI continues to spur optimism on Wall Street.
“With ChatGPT being one of the most innovative AI technologies seen in the industry, MSFT is clearly being aggressive on this front and not going to be left behind on what could be a potential game changing AI investment,” Wedbush said in a note.
Airlines stocks were also in focus after the Federal Aviation Authority lifted a halt on domestic flights following an overnight outage of a system used to send safety and flight information to pilots. More than 8,200 flights have been delayed, and over 1,200 flights were canceled, according to flight-tracking service FlightAware.
The bulk of airlines including American Airlines Group (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), United Airlines Holdings (NASDAQ:UAL), but Southwest Airlines (NYSE:LUV) was marginally in the red.