Dow, S&P 500, Nasdaq futures rise as inflation eases, bank earnings shine

On By Littum

U.S. stock futures rallied on Wednesday as high hopes for bank earnings paid off and a crucial consumer inflation update showed prices rose less than expected in December.

Dow Jones Industrial Average futures (YM=F) rose about 1.5%, while S&P 500 futures (ES=F) pushed up more than 1.5%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) rose nearly 2% on the heels of a mixed day on Wall Street.

Stocks edged higher in premarket trading as the consumer price index (CPI) showed progress toward the Fed’s December inflation target of 2%. On a “core” basis, which strips out the more volatile costs of food and gas, prices rose 0.2% in December from the previous month, slowing from November’s monthly increases of 0.3% and 3.2% compared to last year.

Prior to December’s print, core CPI had been flat at an annualized 3.3% increase over the past four months. It was the first time since July that year-on-year core CPI saw a slowdown in price growth.

Traders still see just a 3% chance of the Fed cutting interest rates in January, according to the CME FedWatch Tool. The remain divided on whether a cut will come in the back half of this year, with odds of easing in June now seen as more likely than not.

DJI – Delayed quote USD

At the end: 14 January at 16:38:28 EST

^DJI ^IXIC ^GSPC

Wall Street banks showed rising profits thanks to a revival in deals and strength in investment banks, which also boosted sentiment on Wednesday morning. JPMorgan Chase ( JPM ) delivered upbeat analyst expectations with a second straight year of record annual profit and a 50% jump in fourth-quarter net income. Its full-year profit of $58 billion was the highest ever in US banking. Its stock rose 1% before the bell.

BlackRock ( BLK ) stock rose after quarterly profit surged more than 20% as assets hit a record $11.6 trillion. Goldman Sachs ( GS ), Wells Fargo ( WFC ) and BNY ( BK ) shares also rose after the banks booked bumper quarters.

Read more: What a Fed rate cut means for bank accounts, CDs, loans and credit cards

LIVE 4 updates

  • Josh Schafer

    Bond yields are taking a breather

    A recent headwind for stocks reversed Wednesday morning.

    The 10-year Treasury yield ( ^TNX ), which had been at its highest level in more than a year, fell more than 12 basis points to 4.66% on Wednesday after cooler-than-expected inflation.

    Meanwhile, stocks rose with futures tied to the major averages all rising 1.5% or more.

  • Josh Schafer

    The latest inflation data shows that prices rose less than expected in December

    New inflation figures out on Wednesday showed that prices rose less than expected in December.

    The latest data from the Bureau of Labor Statistics showed that prices on a “core” basis, which strips out the more volatile costs of food and gas, rose 0.2% from the previous month, lower than the 0.3% economists had expected. On a year-over-year basis, core prices rose 3.2%, below the 3.3% expected by economists and the first move lower in the metric since July.

    The headline consumer price index rose 2.9% from a year earlier in December, up from the 2.7% seen in November but in line with economists’ expectations. The index rose 0.4% from the previous month, ahead of the 0.2% increase seen in November and also in line with economists’ estimates.

  • Jenny McCall

    Good morning. Here’s what’s happening today.

  • Brian Sozzi

    Interesting morning reading on global risks

    Yours truly is getting ready to head out for another week of impactful reporting at the World Economic Forum in Davos, Switzerland – starting next Monday. I’ll have more to say about what we’ll be doing there in Sunday’s Morning Brief newsletter.

    I will quickly note that a source familiar with the matter tells me that President Trump will speak via video feed on Thursday, just days after his inauguration (and perhaps a flurry of executive orders).

    But before the fun, I thought WEF’s annual global risk report that dropped this morning is interesting reading. The biggest risk is “state-based armed conflict.” Other top risks include misinformation and disinformation (good to see Zuck no longer fact-checks at Meta…), extreme weather events, societal polarization, cyberespionage, and warfare.

    Mind you many of these risks are not priced into Mag 7 shares!

    “Rising geopolitical tensions and a breakdown in trust are driving the global risk landscape,” WEF Executive Director Mirek Dušek said in a statement. “In this complex and dynamic context, leaders have a choice: find ways to foster collaboration and resilience, or face increased vulnerabilities.”