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Can JPMorgan’s Q4 Results Spark a Stock Rally, or Will the CPI Report Steal the Spotlight?

Updated: Jan 15, 2025, 13:49 GMT+00:00

Key Points:

  • JPMorgan's Q4 earnings are projected at $4.03 per share, a 32.9% YoY rise, with revenue hitting $41.6 billion.
  • CPI data may reveal a 2.9% YoY inflation increase, with core inflation projected to slow to 0.2% in December.
  • Elevated Treasury yields at 4.782% bolster bank margins but could suppress loan demand and profitability.
  • JPMorgan's diversified model boosts confidence; analysts set a $256.50 target, with shares up 40% YoY.
  • Softer CPI readings could spark rate-cut hopes, aiding equities, while a hotter figure may strengthen the Dollar.
JPMorgan Chase

In this article:

Will JPMorgan Chase Earnings Set a Positive Tone for Markets?

JPMorgan Chase will report its highly anticipated Q4 earnings before the market opens on Wednesday, setting the tone for a crucial day in financial markets. Analysts expect earnings of $4.03 per share on revenue of $41.6 billion, marking a 32.9% year-over-year profit increase, despite higher deposit costs affecting net interest income.

Daily JP Morgan Chase & Co.

The bank’s diversified business model, including investment banking and consumer lending, has allowed it to capture additional market share and maintain robust performance. Analysts remain optimistic, with a “buy” consensus and a $256.50 price target, suggesting continued upside for the stock, which has already climbed 40% over the past year.

How Will CPI Data Shape the Fed’s Next Steps?

Following JPMorgan’s earnings, the December Consumer Price Index (CPI) report will provide key insights into inflation trends. Economists project a 0.3% monthly increase and a 2.9% year-over-year rise in headline inflation, while core inflation, excluding food and energy, is expected to slow to 0.2%.

The CPI data is critical for Federal Reserve policymakers, who have paused rate cuts due to persistent inflation concerns. Although the recent producer price index (PPI) report indicated easing wholesale price pressures, sticky consumer inflation in categories like food and energy could complicate the Fed’s path forward. Traders will focus on whether the data supports future monetary easing or reinforces the current higher-for-longer stance.

What Do Treasury Yields Signal for Banks and Borrowers?

Daily US Government Bonds 10-Year Yield

Treasury yields have stabilized ahead of Wednesday’s events, with the 10-year yield retreating to 4.782%. While banks benefit from higher yields through increased net interest margins, sustained elevated rates could eventually dampen loan demand, posing a risk to longer-term profitability.

For JPMorgan, steady rates have bolstered returns on lending and investments, but analysts will also watch for management’s commentary on the economic outlook and strategies to address deposit cost pressures.

How Could JPMorgan’s Earnings and CPI Data Influence Stocks and the Dollar?

Daily iShares U.S. Financial ETF

Wednesday’s back-to-back release of JPMorgan Chase’s earnings and the CPI report will provide critical insights into the economy and market trends. Strong earnings from JPMorgan could lift investor sentiment and boost financial stocks, as robust performance signals resilience in the banking sector. Analysts expect JPMorgan’s diversified revenue streams and market share gains to reinforce confidence, particularly if the bank delivers optimistic guidance on future profitability despite elevated deposit costs.

Daily E-mini Nasdaq 100 Index Futures

The CPI report, on the other hand, will likely influence the direction of the broader stock market and the U.S. Dollar. A softer-than-expected CPI reading could revive optimism for potential rate cuts, providing relief to rate-sensitive equities such as technology and growth sectors.

Daily US Dollar Index (DXY)

Conversely, a hotter inflation figure might strengthen the Dollar as traders price in the likelihood of prolonged higher interest rates, pressuring stocks with higher debt burdens.

These two key events are likely to heighten market volatility, offering traders a clearer picture of the economy’s health and the Fed’s monetary policy outlook.

More Information in our Economic Calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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