Stocks closed higher Wednesday, with investors awaiting the release of fresh U.S. inflation data and earnings.

The S&P 500 gained 0.57% to end at 4,783.45, while the Dow Jones industrial Average added 170.57 points, or 0.45%, to close at 37,695.73. The Nasdaq Composite advanced 0.75% to settle at 14,969.65.

Intuitive Surgical and Lennar pulled the broad market index higher, gaining 10.3% and 3.5%, respectively. Intuitive increased its procedure growth outlook for fiscal year 2024 after the market close on Tuesday, when Lennar had also announced an increase to its annual dividend.

"We're in this calm before the realization," said Phillip Colmar, managing partner and global strategist at MRB Partners, noting that market activity is fairly muted given the Federal Reserve's planned interest rate cuts that it has priced in by year-end.

"Right now, the market's pretty quiet, but I don't think it'll be quiet all year," Colmar said. "We've fully priced this Goldilocks soft landing scenario. What's next? It's probably 'no landing,' which means the bond yields are probably not going to stay as anchored as they are, some of those rate cuts have come back out and then volatility comes back into the equity market … and then it's not a buy-everything rally that we saw at the year end."

Investors await the latest consumer price index report slated for release Thursday. Economists polled by Dow Jones expect CPI rose 3.2% year over year in December. The producer price index is due on Friday.

Investors will look through the reports for clues on when the Federal Reserve may start cutting rates. Some of those expectations have been dialed back in recent days, although the odds hover at around 64%, according to CME Group FedWatch tool.

"The market is seeing a tug of war against those who see slower, but still resilient, economic growth and those who see a more difficult economic pullback," LPL Financial chief global strategist Quincy Krosby said.

Earnings heats up Friday with results from major financial heavyweights including JPMorgan Chase and Bank of America, along with UnitedHealth and Delta Air Lines.

Stocks are coming off a mixed session. The S&P 500 and Dow closed lower Tuesday, while the Nasdaq posted a slight gain.

Stocks end Wednesday in the green

Stocks rose on Wednesday. Here's how the major indexes closed up:

• The S&P 500 gained 0.57% to end at 4,783.45.
• The Nasdaq Composite advanced 0.75% to settle at 14,969.65.
• The Dow Jones industrial Average added 170.57 points, or 0.45%, to close at 37,695.73.

— Pia Singh

HSBC expects a 'temporary pause' in the equity rally

Equities ended 2023 on a strong note, with the S&P 500 rallying 24.2%, the Dow Jones Industrial Average gaining 13.7%, and the Nasdaq Composite advancing a breathtaking 43%.

But HSBC believes that global equities have now overshot their fundamentals.

"Although we remain constructive on equities strategically, we expect a temporary pause in the rally," the firm wrote. "Global equities have overshot our machine learning (ML) model's prediction by 10% over the last 3 months."

With "markets increasingly priced for perfection," the bank noted that stock valuations could be vulnerable to any hawkish signaling from the Fed or upside surprises in inflation.

HSBC added that amongst all the equity sectors, consumer staples, energy and health care currently look most attractive. Regionally, this extends to China, UAE and Switzerland.

— Lisa Kailai Han

Santa Claus rally has ‘run its course,’ says BCA Research

The Santa Claus rally — which began in late October 2023 — is now looking "tired," according to BCA Research. The S&P 500 has gained nearly 16% during the rally, and has been trading near the 4,750 level since December. 

"Incidentally, this is the consensus median end-of-the-year price target for 2024," strategist Roukaya Ibrahim wrote in a Wednesday note. "To reach the most optimistic forecasts of sell-side strategists of 5,100, earnings growth for the full year must be more than 15%, which is unlikely considering ongoing downgrades." 

Technical signs indicated that the S&P 500 is nearing overbought territory, Ibrahim added. She noted that more than 70% of stocks in the broad market index are higher than their 200-day moving average. 

"This analysis suggests that there is little room for further gains and the rally has run its course. The risk/return trade-off is unfavorable for equities, especially as a soft landing remains elusive," said Ibrahim. 

— Hakyung Kim

Fed's John Williams said inflation is easing but policy still needs to be tight

New York Federal Reserve President John Williams said Wednesday that inflation data is moving in the right direction but expects monetary policy to remain restrictive.

"My base case is that the current restrictive stance of monetary policy will continue to restore balance and bring inflation back to our 2 percent longer-run goal," the influential central bank officials said in a prepared speech.

"I expect that we will need to maintain a restrictive stance of policy for some me to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2 percent on a sustained basis," he added.

Williams added that risks for the Fed remain "two-sided" as it could pull back too soon and risk higher inflation or hold on to long and hurt the economy.

—Jeff Cox

2025 earnings estimates can drive stock market performance this year, CIO says

The stock market's moves in 2024 could actually hinge on how 2025 earnings expectations shape up, according to from David Bahnsen, chief investment officer of The Bahnsen Group.

"Much of 2024's stock market performance will actually depend on earnings estimates for 2025, as the stock market is a discounting mechanism," he said. "In the second half of 2024, we may see revisions to 2025 earnings expectations, up or down, that will determine 2024's equity market behavior."

Bahnsen added that earnings expectations currently feel "very optimistic" for both 2024 and 2025, though a divergence from those expectations could cause volatility in the market. This is particularly likely in the second half of the year, he said, because that's when the market mainly starts to price in the earnings outlook for the upcoming year.

— Alex Harring

S&P 500 outperforms so far this month

The S&P 500 is the sole index of the major three tracking for gains this month.

About one third of the way through January's trading month, the S&P 500 is up 0.3%. By comparison, the Dow and Nasdaq Composite have slipped 0.1% and 0.2%, respectively.

Health care names have given upward momentum to the broad index this month, with the sector up more than 3% since the start of January. Communication services and utility stocks also helped pull the S&P 500 into positive territory.

On the other hand, material and energy stocks helped restrict gains in January, as the two sectors were down by more than 2% each. Industrials was the next worst performing sector, sliding 1.5%.

— Alex Harring

Wells Fargo is 'cautious' heading into fourth-quarter earnings season

Investors should be wary heading into fourth-quarter earnings season, according to Wells Fargo.

"We are cautious entering peak earnings season given: (1) the expected 'management' of 2024 guidance, perhaps driven by weaker pricing/volume trends; and (2) the negative post-earnings returns for the 21 'off-season' SPX firms that have reported," Christopher P. Harvey wrote on Wednesday.

The cautious outlook is driven by seasonal weakness for stocks during the January-February months compared to the rest of the year, which Harvey expects can be attributed in part to conservative annual guidance that's typically introduced during corporate earnings season early in the year.

What's more, Harvey called earnings season a "negative catalyst" so far, citing the poor performance of early announcers. The 21 S&P 500 firms that reported so far have averaged a 2.9% drop, though just one company actually missed consensus earnings-per-share expectations.

"In other words, 4Q23 earnings has mostly been a negative catalyst," Harvey wrote.

Fourth-quarter earnings season will commence Friday with big bank earnings Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

— Sarah Min

Stocks making the biggest moves midday

These companies are making headlines in midday trading.

• Amazon — Amazon shares gained 1.3% after the online retailer laid off hundreds of employees across its Prime Video and MGM Studios divisions.
• GoodRx — GoodRx shares popped 13% after the health-care company issued fourth-quarter revenue guidance of $195 million to $197 million, topping prior guidance of $188 million to $194 million, as well as a FactSet consensus estimate of $190.8 million.
• Lennar — Shares of the homebuilder rose more than 2% after Lennar increased its annual dividend to $2 per share from $1.50 per share previously. Lennar also said it plans to repurchase an additional $5 billion of its stock.

Read the full list here.

— Sarah Min

Market's ahead of itself in AI profit estimates and Fed policy easing, strategist Ed Yardeni says

Stock market investors and analysts have jumped the gun on reality in estimating the immediate contribution of artificial intelligence tools to corporate profits, and in anticipating the likely pace of policy easing this year by the Federal Reserve, long-time Wall Street strategist and economist Ed Yardeni said Wednesday on CNBC's "Squawk on the Street."

"Not only are we seeing exuberance by investors, but certainly we're seeing exuberance by analysts," Yardeni said. "They dramatically increased their earnings expectations for Nvidia," and that drove down the stock's forward P/E multiple to the 20s from the 80s. "But look, it's a hot stock, and it's probably going to remain a hot stock as long as AI delivers. I think it's going to take somewhat longer for AI to deliver as much as the market seems to expect."

Yardeni said Nvidia's performance in the 2020s reminds him of Cisco System's behavior in the 1990s. "The problem is the market gets irrationally exuberant about just how much can be achieved in a very short period of time," in terms of AI's contribution to earnings, Yardeni said. "And I am concerned about sort of a parabolic melt up."

What's more, investors are expecting too many interest rate cuts from the Federal Reserve in 2024, Yardeni said. "I'm in the camp that we're not going into recession — third year in a row I'm saying that — and I'm in the camp that believes that we're going to get two to three rate cuts probably in the second half of the year, not four to five, which is what the market's been discounting."

— Scott Schnipper

22 S&P 500 stocks hit new 52-week highs

Tech titans Alphabet, Meta and Nvidia were among the 22 stocks within the S&P 500 to hit new 52-week highs during Wednesday's trading session.

Shares of Alphabet's C Class traded at levels not seen since April 2022, while Meta stock traded at levels unseen since September 2021. Nvidia reached a new all-time high, reaching its highest intraday level since its IPO in January 1999.

Here are a few of the other names that have reached this milestone today.

• D.R. Horton trading at all-time high levels back to its IPO in June, 1992.
• Allstate trading at all-time highs levels back to its IPO in 1993, originally the insurance subsidiary of Sears, Roebuck.
• Progressive trading at all-time highs back to its IPO in 1971.
• Visa trading at all-time high levels since its IPO in Mar, 2008.
• Boston Scientific trading at all-time high levels back to its IPO in May, 1992.
• Eli Lilly trading at all-time high levels back to 1952 when the company offered its first public shares of stock. 
• McKesson trading at all-time highs back through our history to 1983.

— Christopher Hayes, Lisa Kailai Han

Bankruptcy surge last year sounds worse than it is, Capital Economics says

A wave of bankruptcy filings at the end of 2023 sounds like a bad omen for this year, but it's worth digging into the numbers, according to Capital Economics. It said, about a quarter of the filings in the final three months of the year were all tied to the WeWork bankruptcy.

"Excluding those, Chapter 11 filings fell last quarter ... which looks consistent with weak rather than negative GDP growth," Stephen Brown, the firm's deputy chief North America economist wrote in a research note. He added, "with corporate bond yields falling sharply in the past few months, the worst may already be behind us."

He noted that data from S&P Global, which said the number of business failures last year hit a 13-year high, also backs this up. That data looks at larger firms with more than $2 million in assets, and those bankruptcy filings have been falling since the summer.

"It is probably too soon to sound the all-clear for business bankruptcies," Brown warned, though he thinks a "risk of a material pick-up" has fallen.

—Christina Cheddar Berk

RBC Capital Markets downgraded technology, says median valuation looks expensive

RBC Capital Markets is moving to the sidelines on the information technology industry, downgrading the sector to market weight.

"We continue to like the sector's positive revisions trends on both EPS and sales forecasts," wrote Lori Calvasina, the firm's head of U.S. equity strategy. "But valuations are now clearly expensive for the median stock in the sector on both an absolute and relative P/E basis, a change from a few months ago when valuations for the median stock looked more reasonable on our model."

Simultaneously, the firm upgraded consumer discretionary to market weight from underweight and utilities to overweight from market weight. Improving valuations and positive EPS revisions should also benefit the latter, which tends to outperform as the 10-year yield falls, Calvasina added.

— Samantha Subin

Communications sector ETF reaches 52-week intraday high

The SPDR Communication Services Sector Fund (XLC) climbed to a new 52-week intraday high on Wednesday morning, its highest level since Feb. 2, 2022. If the XLC ends the trading session above 73.16, it will be the highest closing level from Feb. 2, 2022 as well.

The rise has been fueled by mega-caps Meta and Alphabet, which both hit 52-week highs today. Meanwhile, most XLC components are negative on the day.

— Hakyung Kim, Nick Wells

'Higher, but more sober' equity market in 2024, according to Barclays

After the strong year-end rally in 2023, the market will see some upside in 2024, albeit limited, says Barclays.

"We expect a higher, yet more sober, equity market in 2024. Post an exceptional year-end rally, the bar for positive surprises has been raised and Cyclicals look toppish," said Barclays equity strategist Emmanuel Cau.

Barclays projects "healthy consolidation" for equities after the fast-paced equity rally. Cau added that valuations and earnings could potentially create some upside potential.

"Although the rate cuts priced in the US look too aggressive to us absent a deep recession, we agree that the direction of travel is towards lower rates," Cau said.

— Hakyung Kim

Stocks open little changed

The S&P 500 rose 0.1% at the open, while the Dow Jones Industrial Average gained 32 points, or 0.1%. The Nasdaq Composite advanced 0.2%.

— Fred Imbert

See the stocks making notable premarket moves

These are some of the stocks making moves before the bell on Wednesday:

• TG Therapeutics — The biopharmaceutical stock jumped 11.7% after providing preliminary net product revenue for the company's multiple sclerosis treatment.
• Intuitive Surgical — The medical stock popped 4.9% after its preliminary fourth-quarter revenue report of $1.93 billion, topping the $1.87 billion consensus estimate of analysts polled by StreetAccount.
• Bloom Energy — Shares climbed 4.3% on the heels of an upgrade to outperform by Baird.

See the full list here.

— Alex Harring

ETF issuers keep cutting fees for bitcoin funds

The battle to lower fees on bitcoin ETFs continues to heat up even though the funds have not yet been approved.

Ark Invest and 21Shares said in a filing late Tuesday that the fee on their proposed bitcoin ETF would be 0.21%, down from 0.25%. Meanwhile, BlackRock's iShares Bitcoin Trust now has a proposed fee of 0.25%, down from 0.30%.

Both funds also have waivers that will temporarily reduce the fee even further.

— Jesse Pound

WD-40 rises on strong earnings

WD-40 reported better-than-expected results for the fiscal first quarter, sending shares up more than 5% before the bell. The company earned $1.28 per share, up from $1.02 per share a year prior.

"We have started fiscal year 2024 firing on all cylinders, with significant volume-related sales growth across all three trade blocs," CEO Steve Brass said in a statement.

— Fred Imbert

Intuitive Surgical rises on strong preliminary revenue

Shares of Intuitive Surgical rose more than 5% in the premarket after the company reported preliminary fourth-quarter revenue of $1.93 billion, exceeding a StreetAccount estimate of $1.87 billion. The company said procedures using its da Vinci systems rose 21% year over year.

— Fred Imbert

Lennar raised annual dividend, shares rise

Homebuilder Lennar increased its annual dividend to $2 per share from $1.50 per share, pushing the stock up 2% in the premarket. The company also said the board greenlit the buying back of up to an additional $5 billion in stock.

— Fred Imbert

Bitcoin drops to $46,000 as SEC clarifies it hasn't approved crypto ETF

Prices of bitcoin dropped to around $46,000 after the U.S. Securities and Exchange Commission clarified on Tuesday it had yet not approved ETF trading for the cryptocurrency.

Bitcoin had shot up to almost $47,000 after a false post from the SEC's X account said the regulator had approved bitcoin ETFs for trading. 

However, an SEC spokesperson told CNBC that its X account had been compromised, and the post regarding bitcoin ETFs was not made by the SEC or its staff.

Following the SEC's clarification bitcoin dropped to about $45,400, before recovering slightly.

X confirmed that the account was compromised, but added that it was not due to any breach of the company's systems.

— Lim Hui Jie

Australia November inflation slows more than expected

Australia consumer price index rose 4.3% year on year in November, its smallest increase since January 2022 and lower than the 4.9% recorded in October.

The figure was also slightly below the 4.4% expected by economists in a Reuters poll.

The country's statistics bureau said the most significant contributors in November were housing, insurance and financial services, as well as alcohol and tobacco.

The inflation rate is a key consideration for the country's central bank when it decides on monetary policy.

— Lim Hui Jie

South Korea's unemployment rate hits 23-month high in December

South Korea's seasonally adjusted unemployment rate climbed to a 23-month high of 3.3% in December, up from 2.8% in November.

Data from the country's statistics bureau revealed that the number of unemployed persons increased by 78,000 to 944,000, or 9% year on year.

The employment-to-population ratio stood at 61.7% in December, up 0.4 percentage point year on year.

— Lim Hui Jie

HPE will acquire Juniper Networks for $14 billion

Hewlett Packard Enterprise announced late Tuesday that it has reached an agreement to acquire Juniper Networks in an all-cash deal for $40 a share. The transaction is worth about $14 billion.

The news follows a day after The Wall Street Journal reported that HPE was in "advanced talks" to buy the networking company.

Shares of Juniper, which hit a 52-week high during Tuesday's session, added 0.6% in after-hours action. HPE shares ticked down by 0.3%. In regular trading, Juniper soared nearly 22%, while HPE shed close to 9%.

Read more about the HPE-Juniper deal here.

— Darla Mercado, Jordan Novet

Stocks making the biggest moves in extended trading

Here are some of the stocks making the most significant moves after the bell:

• WD-40 — The maker of rust remover and lubricant jumped nearly 7%. WD-40 reported first-quarter financial results that surpassed Wall Street's expectations on the top and bottom lines. The company also reported a 13% increase in revenues year over year.
• Intuitive Surgical — Intuitive Surgical's stock added nearly 5% after the medical device maker offered a stronger-than-expected sales outlook for the fourth quarter. The company said it anticipated revenue to come in at $1.93 billion, ahead of the $1.87 billion expected by analysts surveyed by FactSet.
• PriceSmart — PriceSmart shares popped 9% after posting first-quarter results. The company said revenue increased 11% year over year and posted earnings of $1.24 per share, excluding items. That topped a FactSet estimate of $1.09.
• Coinbase, Marathon Digital — Cyrptocurrency exchanges Coinbase and Marathon Digital fell about 1% and 2%, respectively, as bitcoin prices slumped. The U.S. Securities Exchange said its official X account had been compromised after an incorrect post said the agency had approved bitcoin exchange-traded funds.

— Samantha Subin

Stock futures open little changed

Stock futures opened little changed on Tuesday.

Futures tied to the Dow Jones Industrial Average dipped 25 points,. S&P 500 futures and Nasdaq-100 futures inched down about 0.05% each.

— Samantha Subin