Stock market today: Dow, S&P 500, Nasdaq futures surge as inflation cools, bank earnings shine

US stock futures popped on Wednesday as high hopes for bank earnings paid off, and a crucial consumer inflation update showed prices increased less than expected in December.

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

Stocks took a leg higher in pre-market trading as the Consumer Price Index (CPI) showed progress toward the Fed’s 2% inflation target in December. On a “core” basis, which strips out the more volatile costs of food and gas, prices in December climbed 0.2% over the prior month, a deceleration from November’s 0.3% monthly gain, and 3.2% over last year.

Prior to December’s print, core CPI had been stuck at a 3.3% annual gain for the past four months. It was the first time since July that year-over-year core CPI saw a deceleration in price growth.

Traders stilll see just a 3% chance that the Fed lowers rates in January, per the CME FedWatch Tool. They remain split 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 close: January 14 at 4:38:28 PM EST

^DJI ^IXIC ^GSPC

Wall Street banks posted surging profits thanks to a dealmaking revival and investment banking strength, also boosting spirits Wednesday morning. JPMorgan Chase (JPM) delivered on optimistic 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 American banking. Its stock rose 1% before the bell.

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

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

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Bond yields take a breather

A recent headwind for stocks reversed on Wednesday morning.

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

Meanwhile stocks rallied with futures tied to the major averages all rising 1.5% or more.
Latest inflation data shows prices increased less than expected in December

New inflation data out Wednesday showed prices increased less than expected in December.

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

The headline Consumer Price Index increased 2.9% over the prior year in December, an uptick from the 2.7% seen in November but in line with economists expectations. The index rose 0.4% over the previous month, ahead of the 0.2% increase seen in November and also on par with economists’ estimates.
Good morning. Here’s what’s happening today.
Interesting morning read 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 — which kicks off next Monday. I will have more to say on what we will be doing there in this Sunday’s Morning Brief newsletter.

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

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

Thinking a lot of these risks aren’t priced into Mag 7 stocks!

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