US open: Major indices trade higher following December CPI reading

As of 1520 GMT, the Dow Jones Industrial Average was up 0.46% at 36,419.49, while the S&P 500 was 0.53% firmer at 4,737.82 and the Nasdaq Composite came out the gate 0.73% stronger at 15,263.32.

The Dow opened 167.47 points higher on Wednesday, extending gains recorded in the previous session following Federal Reserve chairman Jerome Powell's Senate testimony on Tuesday.

Powell's comments were still in focus early on Wednesday, with the Fed head telling the Senate Banking Committee that he anticipates interest rate increases in 2022, along with the end of the central bank's monthly bond-buying programme in March and a reduction in asset holdings, moves he believes will likely be required to manage inflation amid the economy's recovery from the Covid-19 pandemic.

However, Wednesday's primary focus was the December reading of the Labor Department's consumer price index, with the report revealing that the cost of living in the US increased a bit more quickly than expected last month.

According to the data, the headline US consumer price index rose at a month-on-month pace of 0.5% in December, which pushed the year-on-year rate of CPI inflation from 6.8% in November to 7.0% for December. At the core level, which excludes the contribution made by food and energy prices, CPI was 5.5% higher on the year.

Also on the macro front, the Mortgage Bankers Association's weekly mortgage applications report revealed that loan application volume rose 2% compared with the previous week as mortgage rates moved to 3.52% from 3.33%, their highest level in over twelve months, potentially leading prospective homebuyers to think that affordability windows looked set to close faster than initially expected.

The yield on the benchmark 10-year Treasury note slipped to 1.719% at the open after topping 1.8% earlier in the week.

No major corporate earnings were slated for release on Wednesday.