Dow News: JPMorgan, Wells Fargo Results Boost Futures; CPI to Confirm or Cap Rally?

Dow Futures Rally on Strong Bank Earnings as Traders Eye CPI Data

Stock futures climbed Wednesday morning, driven by better-than-expected earnings from major banks, with the focus now shifting to December’s Consumer Price Index (CPI) report. Dow Jones futures rose 200 points (0.4%), while S&P 500 and Nasdaq 100 futures also gained 0.4%.

Investors are assessing whether the inflation data will extend the rally sparked by robust bank earnings or shift the market’s early momentum.

How Did Major Banks Fuel Market Optimism?

The earnings season kicked off with strong results from major financial institutions. JPMorgan Chase led the pack, jumping nearly 3% after reporting earnings per share (EPS) of $4.81, far exceeding the $4.11 consensus estimate. Revenue also beat forecasts, supported by strength in fixed-income trading and investment banking.

Wells Fargo shares rose 3%, buoyed by an adjusted EPS of $1.42 versus the $1.35 estimate. The bank also projected a 1%-3% rise in net interest income in 2025, signaling continued profitability despite higher rates.

BlackRock and Goldman Sachs followed with earnings beats, with BlackRock’s shares climbing over 3% after reporting $11.93 EPS against an $11.19 forecast.

Will the CPI Report Shift Market Sentiment?

The CPI report, due at 13:30 GMT, is expected to show headline inflation rising 0.3% monthly and 2.9% year-over-year, with core inflation predicted at a more moderate 0.2% increase. A cooler-than-expected reading could bolster hopes for Federal Reserve rate cuts, supporting rate-sensitive stocks like tech and growth.

Conversely, a stronger inflation print might dampen equity gains, reinforcing expectations for higher interest rates in the near term. The report follows Tuesday’s lighter-than-expected wholesale inflation data, which briefly lifted stocks.

What Are Treasury Yields Signaling?

Treasury yields edged lower Wednesday, with the 10-year yield retreating 3 basis points to 4.76%. A decline in yields can provide relief to borrowers and stimulate market sentiment. However, banks stand to benefit from elevated yields through improved net interest margins, even as prolonged high rates may eventually suppress loan demand.

What Should Traders Watch Next?

Traders are closely monitoring whether the CPI data aligns with the Federal Reserve’s inflation goals and what it signals about future monetary policy. Combined with strong bank earnings, a favorable inflation report could sustain upward momentum in equities. However, hotter inflation might pressure markets, particularly in rate-sensitive sectors.

As the Federal Reserve evaluates its next move, upcoming earnings reports from Bank of America and Morgan Stanley on Thursday will also provide critical clues on the broader economic outlook and banking sector performance. Expect heightened volatility as traders parse these key developments.

More Information in our Economic Calendar.