US stock market posts massive gains while Bitcoin goes back to its slump

Wall Street just went wild. Stocks posted their biggest gains since Trump took office again, with the S&P 500 climbing 1.8% and the Nasdaq skyrocketing 2.5%.

This was a full-blown rally fueled by two big factors: lower-than-expected inflation and blowout earnings from America’s banking giants.

Wall Street banks dominate while Treasury yields take a hit

Citigroup, Goldman Sachs, and Wells Fargo stole the show, each jumping about 6% on the back of massive quarterly profits.

Inflation data from December delivered a pleasant surprise. While headline inflation ticked up to 2.9% from 2.7% in November, core inflation—the kind that excludes food and energy costs—actually fell slightly, landing at 3.2%.

That little dip was enough to convince traders that the Federal Reserve might finally cut interest rates earlier than expected, with July now looking more likely than September.

Meanwhile, the bond market felt the effects. The two-year Treasury yield—a key indicator for rate expectations—fell to 4.27%, down 0.1 percentage point. The 10-year yield, which sets borrowing costs globally, dropped even further to 4.65%.

Lower yields mean bond prices are climbing, signaling strong demand from investors eager to lock in gains before the Fed makes any moves. Even the dollar took a hit, dropping 0.2% against a basket of currencies.

The Fed isn’t cutting rates anytime soon unless inflation really starts behaving. Dow futures added 26 points early Thursday, S&P 500 futures climbed 0.35%, and Nasdaq futures gained 0.6%.

Bitcoin’s wild ride: $100K one day, $97K the next

Over in crypto land, Bitcoin decided to keep things interesting. After breaking the $100,000 barrier earlier this week, BTC tumbled back to $97,000. It’s the kind of volatility that makes crypto traders either rich or bald, depending on the timing.

The rollercoaster didn’t stop institutional investors from piling in. Spot Bitcoin ETFs saw $723.2 million in inflows yesterday—a massive vote of confidence from big money. Ethereum ETFs weren’t far behind, pulling in healthy numbers as well.

Options traders were just as bold, snapping up January Bitcoin calls with strike prices ranging from $100K to $110K. March contracts are holding the most open interest at $120K, which gives you an idea of where the market thinks BTC might be headed.

Bitcoin’s dominance took a hit though, dropping from 58.6% to 57.4%. If it dips below 57.3%, altcoin traders could finally get their moment.