Investors extended positive wagers on stocks, anticipating that inflation data expected Thursday will show a further decrease.

Indices rose Wednesday as investors extended positive wagers on stocks, anticipating that inflation data expected Thursday will show a further decrease.

The Dow Jones rose 0.80%, the Nasdaq rose 1.8%, and the S&P 500 rose 1.3%.

Investors are "waiting for fresh news suggesting inflation is moving lower in the CPI data," Wells Fargo said in a note ahead of the consumer price index report coming Thursday, citing previous data pointing to cooling inflation, including lessening pay pressures seen in the December employment report.

Economists predict that the consumer price index will fall to 6.5% in December from 7.1% in November, supported by reduced vehicle, oil, and rent costs.

Expectations for more signals of reducing inflation pressures have boosted hopes for a less hawkish Fed.

Consumer discretionary companies drove the market higher, with Amazon and Tesla leading the way, with the latter announcing plans to expand its electric vehicle manufacturing in Texas. The decision follows concerns about demand after Tesla recently reduced EV costs in China, a crucial market for the EV maker.

Travel and hospitality stocks also lifted consumer stocks, with Expedia rising almost 5% after Oppenheimer upgraded the travel business to outperform from perform due to "customer service efficiency improvements and excellent cost cutting execution," which are expected to raise profits.

Meanwhile, Alphabet and Microsoft finished the day up 3%, leading the way for big tech. Microsoft's rumoured interest in investing in artificial intelligence start-up OpenAI fuels Wall Street excitement.

Airlines stocks were again in the spotlight after the Federal Aviation Administration lifted a suspension on domestic flights due to an overnight failure of a system used to relay safety and flight information to pilots. According to flight-tracking website FlightAware, over 8,200 flights have been delayed and over 1,200 have been cancelled.

The Wall Street rally comes as banks such as Bank of America Corp, Citigroup, JPMorgan Chase & Co, and Wells Fargo prepare to kick off the quarterly earnings season on Friday.

(Investing.com, reuters.com)