Financial stocks led the sector higher on Wednesday, as a surge in investment banking and trading revenue boosted results from major banks including JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C) and Wells Fargo (WFC).

Read more about their results here.

Big tech stocks remain the clear leaders amid Wednesday's sharp gains in the stock market.

All seven of the so-called "Big 7" tech stocks - Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA) and Nvidia (NVDA) ) ) — an increase of more than 1.5% or higher.

The Roundhill Magnificent Seven ETF (MAGS) rose more than 3.5%, far outpacing the gains of the three major averages.

The 10-year Treasury yield (^TNX) fell sharply to 4.65% on Wednesday, reigniting interest in risk assets.

But as we have been stressing, the recent surge over the decade has been driven by a variety of reasons, not just expectations of rising inflation. Brij Khurana, fixed income portfolio manager at Wellington Management, told Yahoo Finance that a positive CPI report doesn't fully account for the headwinds stocks have faced from rising interest rates in the near term.

Khurana said it was "too early" to call bond yields peaking, adding that yields could move higher again if the new Trump administration brings more fiscal spending than expected.

Still, Khurana described Wednesday's market moves as "a welcome reprieve from the bond market."

“There are risks going both ways in bond yields,” Khurana said. "It's not just one way."

Better-than-expected inflation data on Wednesday provided a particularly promising sign for the Federal Reserve.

The housing index showed prices rising 4.6% from the previous year, the lowest level since January 2022. While the index remains elevated, a key part of the inflation story over the past few years continues to show progress (Federal Reserve Chairman) Jerome Powell discussed it at a recent press conference.

"What we're really worried about is housing services inflation, and it's really been declining quite steadily now, more slowly than we thought... but it's still declining steadily," Powell said on Dec. 18.

Some economists believe a rate cut could still be considered in 2025 due to additional progress in inflation-sticky areas such as housing.

"The economic slowdown over the past few months is exactly what Powell said it was, and that should give the FOMC more confidence that they can continue to cut rates this year, even if there is a short-term pause," said Thomas, U.S. economist at Jefferies. ." Simons wrote in a note to clients on Wednesday.

Read more about housing inflation here.

Bitcoin (BTC-USD) surged to hit $99,000 following weak inflation data early Wednesday.

The world's largest cryptocurrency has become an emerging trend in recent weeks, along with the broader market's moves.

Read more from Yahoo Finance's Ethan Wolff-Mann on what's driving Bitcoin's recent price rally.

Tuesday's shakeup at JPMorgan Chase (JPM) raised questions about when Chief Executive Officer Jamie Dimon will step down.

The head of the bank said on Wednesday that it might not do so in the short term.

Yahoo Finance's David Hollerith reports:

Jamie Dimon on Wednesday agreed with analysts' assessment that the "base case" for his resignation as CEO of JPMorgan Chase (JPM) is several years away.

The new comments on succession came a day after the largest U.S. bank announced a management shakeup that raises new questions in the race for Dimon, 68, the longest-serving CEO of a major bank.

Read more here.

Oil prices rose on Wednesday as U.S. crude inventories fell for an eighth straight week.

West Texas Intermediate crude (CL=F) rose more than 2.5% to around $79.50 a barrel, while international benchmark Brent crude (BZ=F) rose 2% to hover above $81 a barrel.

Oil prices rose after U.S. inventories fell by 1.96 million barrels last week to the lowest level since April, according to the latest data from the Energy Information Administration on Wednesday. Meanwhile, gasoline inventories reached their highest level in a year.

Crude prices have been rising recently after the United States announced broad sanctions on oil producer Russia in a bid to cut off Moscow's revenue amid the ongoing war in Ukraine.

On Friday, a better-than-expected December jobs report spooked markets and sparked talk of the Federal Reserve not cutting interest rates at all or possibly raising rates at some point.

To a large extent, economists believe the employment data heightened concerns about whether inflation will start to show signs of softening, which could prompt the Federal Reserve to cut interest rates in 2025. Early evidence of this trend came from the Consumer Price Index (CPI) released on Wednesday.

On a "core" basis that excludes volatile food and gas costs, prices rose 3.2% compared with the previous year. This marked the first time core CPI fell since July.

While economists don't expect the data to prompt a rate cut at the Fed's January meeting, some do see a path to a rate cut later in 2025.

Citi economist Veronica Clark wrote in a note to clients on Wednesday that markets "overestimated the stickiness of inflation."

"Details in December's data should also encourage the Fed to ease monetary policy further, with many factors broadly in line with expectations and in line with pre-pandemic standards," Clark wrote.

“Weaker inflation should give the Fed more confidence that the recent acceleration was just a shock,” Michael Gapen, chief U.S. economist at Morgan Stanley, wrote. “This print is consistent with our March rate cut. The appeal is unanimous.”

Shares of JPMorgan Chase & Co (JPM) were trading slightly above flat Wednesday despite a huge jump in profits at the largest U.S. bank.

Yahoo Finance's David Hollerith reports:

Last year, JPMorgan Chase (JPM) generated more profits than ever before, earning $14 billion in the final quarter of 2024.

Its full-year profit rose to $58 billion, a record for JPMorgan Chase and the highest in the history of the U.S. banking industry. Its fourth-quarter profit increased 50% from the same period last year.

The results were boosted by a surge in JPMorgan's Wall Street business as trading across the industry returned after a two-year drought. JPMorgan's investment banking revenue grew 49% year-over-year.

Read more here.

Stocks were broadly higher at the start of Wednesday's trading session on Wall Street.

All 11 sectors were in the green, led by rate-sensitive sectors such as real estate (XLRE) and utilities (XLU). Five sectors outperformed the S&P 500's (^GSPC) 1.3% gain.

Recent headwinds for stocks disappeared Wednesday morning.

The 10-year Treasury yield (^TNX), which had risen to its highest level in more than a year, fell more than 12 basis points to 4.66% on weaker-than-expected consumer inflation data.

Meanwhile, stocks rose, with futures tied to the major averages all rising 1.5% or more.

The latest consumer inflation data released on Wednesday showed prices rose less than expected in December.

Consumer Price Index data from the U.S. Bureau of Labor Statistics showed that on a "core" basis (which excludes volatile food and gas costs), prices rose 0.2% month-on-month. This was lower than the 0.3% expected by economists.

On an annual basis, core prices rose 3.2%, below economists' forecast of 3.3%. This is the first time the indicator has fallen since July.

Overall CPI rose 2.9% year-on-year in December, higher than November's 2.7%, but in line with economists' expectations. The index rose 0.4% from the previous month, exceeding November's 0.2% gain and in line with economists' expectations.

You are indeed gearing up for a week of impactful presentations at the World Economic Forum next Monday in Davos, Switzerland. I'll have more to say about what we'll be doing there in this Sunday's morning briefing.

I'll quickly note that a source familiar with the matter told me that President Trump will speak via video on Thursday, just days after his inauguration (and perhaps a slew of executive orders).

But before the fun, I think the World Economic Forum’s annual Global Risks Report, released this morning, is worth a read. The greatest risk is "state armed conflict." Other major risks include misinformation and disinformation (nice to see Zuckerberg no longer fact-checking at Meta...), extreme weather events, social polarization, cyber espionage, and war.

Think Mag 7 stock isn't pricing in many of these risks!

"Rising geopolitical tensions and a breakdown in trust are driving the global risk landscape," Mirek Dusek, managing director of the World Economic Forum, said in a statement. "In this complex and dynamic context, what leaders can do Make the choice: Find ways to foster collaboration and resilience, or face complex vulnerabilities.”