US STOCKS-Wall St surges after inflation data, strong bank earnings

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Updates with mid-session trading

By Johann M Cherian and Sukriti Gupta

Jan 15 (Reuters) - Wall Street's main indexes soared on Wednesday, with the benchmark S&P 500 touching a one-week high, driven by lower-than-expected December core inflation data and robust quarterly earnings from major U.S. banks.

At 11:37 a.m. ET, the Dow Jones Industrial Average .DJI rose 570.93 points, or 1.34%, to 43,089.21, the S&P 500 .SPX gained 80.82 points, or 1.38%, to 5,923.73 and the Nasdaq Composite .IXIC gained 356.93 points, or 1.87%, to 19,401.33.

The domestically focused small-cap Russell 2000 index .RUT jumped 1.6%.

A Labor Department report showed the consumer price index rose in line with expectations in December. Still, markets were focused on the core CPI figure, which advanced 3.2%, lower than estimates of a 3.3% rise.

Traders were pricing in nearly even odds that the U.S. Federal Reserve will cut interest rates twice by the end of 2025, with the first reduction to come in July.

The yield on the benchmark Treasury note US10YT=RR dipped from its 14-month high and was last at 4.66%.

Nine of the 11 S&P 500 sectors traded higher, with communication services .SPLRCL leading advances with a 2.2% rise. The S&P 500 was poised for its biggest daily jump since November 6.

Investors were relieved by a long-awaited ceasefire deal between Israel and Hamas , paving the way to potentially ending the 15-month-long Gaza war that has upended the Middle East.

Markets were also focused on strong quarterly results from major banks.

JPMorgan Chase & Co JPM.N climbed 1.4% after the lending giant posted a record annual profit in the fourth quarter, while Wells Fargo WFC.N added 6.1% after its fourth-quarter profit beat Street expectations as a rebound in dealmaking activity boosted its investment banking business.

Goldman Sachs GS.N gained 4.7% after posting its best quarterly profit since the third quarter of 2021, while Citigroup C.N swung to a profit in the fourth quarter , sending its shares up 5.6%.

"It's a confluence of two bullish factors," said Adam Sarhan, chief executive of 50 Park Investments.

"One, you've got inflation that is not out of control, so it leaves the door open for more easy money from the Fed. And two, you have earnings from the big banks, which are coming in so far as being bullish."

The S&P 500 banks Index .SPXBK rose 2.9%, on track to log gains of about 6% in January. It has outperformed Wall Street's main indexes, which are poised to notch modest gains for the month, including Wednesday's advances.

In 2024, the banking index logged its biggest annual jump since 2019 on expectations that U.S. President-elect Donald Trump's policies, such as tax cuts and loose regulations, could boost the financial sector.

New York Fed President John Williams reiterated the U.S. central bank's dependence on data at a time when it must navigate a high level of uncertainty, largely driven by anticipated policy changes by the incoming administration.

The Fed is also slated to unveil its beige book on economic activity at 2:00 p.m. ET.

BlackRock BLK.N rose 3.8% after its assets hit a record high of $11.6 trillion in the fourth quarter.

Advancing issues outnumbered decliners by a 5.59-to-1 ratio on the NYSE, and by a 2.95-to-1 ratio on the Nasdaq.

The S&P 500 posted 19 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 48 new highs and 63 new lows.

(Reporting by Johann M Cherian, Medha Singh and Sukriti Gupta in Bengaluru; Editing by Pooja Desai)

((johann.mcherian@thomsonreuters.com;))