The major U.S. index futures are currently pointing to a roughly flat open on Thursday, with stocks likely to show a lack of direction following the rally seen in the previous session.

Traders may a moment to digest the rally seen on Wednesday, which saw the major averages post their largest daily percentage gains in over two months amid a positive reaction to consumer price inflation data.

Nonetheless, some positive sentiment may be generated in reaction to a Labor Department report showing a bigger than expected rebound by initial jobless claims in the week ended January 11th.

The Labor Department said initial jobless claims climbed to 217,000, an increase of 14,000 from the previous week’s revised level of 203,000. Economists had expected jobless claims to rise to 210,000.

The bigger than expected increase came after jobless claims fell to their lowest level since hitting 200,000 in the week ended February 17, 2024.

The data may add to optimism about the outlook for interest rates following yesterday’s report showing an unexpected slowdown by the annual rate of core consumer price growth.

The Commerce Department also released a report showing retail sales in the U.S. increased by less than expected in the month of December.

The report said retail sales rose by 0.4 percent in December after advancing by an upwardly revised 0.8 percent in November. Economists had expected retail sales to climb by 0.6 percent.

Meanwhile, a slump by shares of UnitedHealth (NYSE:UNH) may weigh on the Dow, with the health insurance giant tumbling by 4.3 percent in pre-market trading after reporting weaker than expected fourth quarter revenues.

Stocks moved sharply higher early in the session on Wednesday and continued to turn in a strong performance throughout the trading day. The major averages all surged after ending Tuesday’s trading narrowly mixed.

The tech-heavy Nasdaq posted a standout gain, soaring 466.84 points or 2.5 percent to 19,511.23 after ending the previous session at its lowest closing level in almost two months.

The Dow also jumped 703.27 points or 1.7 percent to 43,221.55, while the S&P 500 shot up 107.00 points or 1.8 percent to 5,949.91.

The rally on Wall Street reflected 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.

“Core Inflation isn’t accelerating and that’s the story,” said Jamie Cox, Managing Partner for Harris Financial Group. “The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion.”

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

Financial stocks moved sharply higher in reaction to the upbeat earnings news, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index spiking by 4.1 percent and 3.1 percent, respectively.

Substantial strength was also visible among interest rate-sensitive housing stocks, resulting in a 2.3 percent surge by the Philadelphia Housing Sector Index.

Computer hardware, semiconductor and software stocks also saw considerable strength, contributing to the strong upward move by the tech-heavy Nasdaq.

Retail, steel and energy stocks also showed notable moves to the upside on the day, moving higher along with most of the other major sectors.

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