Market Optimism Soars as Bank Earnings Exceed Expectations
US stock futures surged on Wednesday, driven by impressive bank earnings and anticipation of crucial consumer inflation data. The Dow Jones Industrial Average futures climbed 0.5%, while S&P 500 futures rose 0.3%, and Nasdaq 100 futures added 0.4%. Wall Street banks, including JPMorgan Chase, BlackRock, and Goldman Sachs, reported surging profits, boosting investor confidence.
Banking Sector Sees Record Profits
JPMorgan Chase delivered a second consecutive year of record annual profit, with a 50% jump in fourth-quarter net income. Its full-year profit of $58 billion was the highest ever in American banking. BlackRock’s quarterly profit jumped over 20% as assets hit a record $11.6 trillion. Goldman Sachs, Wells Fargo, and BNY Mellon shares also gained after reporting bumper quarters.
Consumer Inflation Data Takes Center Stage
Markets are now bracing for Wednesday’s report on the consumer price index for December, which could reset or further entrench interest-rate bets. The CPI report is expected to show annual headline inflation at 2.9% and a monthly rate of 0.4%. A strong reading could restart selling in stocks and bonds, while a weak reading could ease interest-rate concerns.
New Inflation Data Shows Prices Increased Less Than Expected
The latest data from the Bureau of Labor Statistics showed that prices increased less than expected in December. Core prices increased 0.2% over the prior month, lower than economists’ expectations, and the first move lower in the metric since July. The headline Consumer Price Index increased 2.9% over the prior year in December, in line with economists’ expectations.
Earnings Season Kicks Off
Bank earnings kick off the season in earnest, with a Consumer Price Index reading having investors on high alert. Other notable earnings reports include BlackRock, BNY Mellon, Citi, JPMorgan Chase, Synovus, Wells Fargo, and Goldman Sachs.
Global Risks Take Center Stage
The World Economic Forum’s annual global risk report highlights state-based armed conflict as the top risk, followed by misinformation and disinformation, extreme weather events, societal polarization, cyber-espionage, and warfare. These risks are not yet priced into the market, and leaders must find ways to foster collaboration and resilience to mitigate them.
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