The major U.S. index futures are currently pointing to a sharply higher open on Wednesday, with stocks likely to show a strong move to the upside following the lackluster performance seen in the previous session.

Stocks are likely to benefit from a positive reaction to the Labor Department’s closely watched report on consumer price inflation in the month of December.

While the report showed consumer prices rose by slightly more than expected in December, the annual rate of core consumer price growth unexpectedly slowed.

The Labor Department said its consumer price index climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected consumer prices to rise by another 0.3 percent.

The report also said the annual rate of growth by consumer prices accelerated to 2.9 percent in December from 2.7 percent in November, in line with economist estimates.

Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in December after increasing by 0.3 percent for four straight months. The uptick matched expectations.

The annual rate of growth by core consumer prices slowed to 3.2 percent in December from 3.3 percent in November, while economists had expected yearly growth to remain unchanged.

Positive sentiment is also likely to be generated in reaction to positive earnings news from financial giants JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C).

JPMorgan Chase, Goldman Sachs and Citigroup are all seeing notable pre-market strength after reporting quarterly earnings that exceeded analyst estimates.

After failing to sustain an early move to the upside, stocks showed a lack of direction over the course of the trading session on Tuesday. The major averages swung back and forth across the unchanged line before eventually closing narrowly mixed.

While the tech-heavy Nasdaq dipped 43.71 points or 0.2 percent to 19,044.39, the S&P 500 inched up 6.69 points or 0.1 percent to 5,842.91 and the Dow climbed 221.16 points or 0.5 percent to 42,518.28.

The initial strength on Wall Street came following the release of a Labor Department report showing producer prices rose by slightly less than expected in the month of December.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.

Meanwhile, the report said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.

The smaller than expected monthly increase by producer prices helped ease recent concerns about the outlook for inflation and interest rates, although the faster annual growth kept buying interest somewhat subdued.

Traders may also have been reluctant to make more significant moves ahead of the release of the more closely watched report on consumer price inflation.

Gold stocks moved sharply higher on the day, resulting in a 2.8 percent spike by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a modest increase by the price of the precious metal.

Substantial strength was also visible among housing stocks, as reflected by the 2.7 percent surge by the Philadelphia Housing Sector Index.

Airline stocks also showed a significant move to the upside, driving the NYSE Arca Airline Index up by 2.4 percent.

Networking, natural gas and banking stocks also saw notable strength, while pharmaceutical stocks showed a considerable move to the downside.

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