Wall Street gains as inflation data supports Fed bets

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Wall Street gains as inflation data supports Fed bets
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U.S. stock indexes rose on Wednesday after inflation data largely met high expectations, easing some fears that the Federal Reserve would pull back support, with megacap technology stocks offering the biggest boost.

Data from the Labor Department showed the consumer price index increased 0.5% last month after rising 0.8% in November, while in the 12 months through December, the CPI surged 7.0% to its highest year-on-year rise in nearly four decades.

Economists polled by Reuters had forecast a CPI gain of 0.4% for December and 7.0% on a year-on-year basis."Investors were bracing for even hotter in inflation than what we actually saw. As bad as the number is and as much inflationary pressure that's in the economy there was a little relief in that," said Anthony Saglimbene, Ameriprise Financial's global market strategist in Troy, Michigan.

"Today's inflation report validates the Fed trajectory and means they don't have to be any more aggressive than is already priced in." The central bank's plan for easing accommodation to fight inflation includes raising interest rates, which analysts expect to start as soon as March, as well as tapering its bond buying program and reducing its asset holdings.

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