Stock Market Update

The S&P 500 futures are up 20 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 85 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 200 points and are trading 0.5% above fair value.

Contracts linked to the S&P 500, Nasdaq 100, and Dow industrials are higher in front of the December Consumer Price Index (CPI) report at 8:30 ET. The market expects headline CPI to increase by 0.3% month-over-month in December, the same pace of growth seen in November, while core-CPI growth is expected to tick down to 0.2% on a month-over-month basis from 0.3% in November. 

Bank earnings are also in focus this morning after JPMorgan Chase (JPM), Wells Fargo (WFC), and Goldman Sachs (GS) reported better-than-expected results, garnering positive responses in premarket action and boosting the broader equity market.

The price action in Treasuries has also acted as support for the upside bias in equities. The 10-yr yield is down three basis points to 4.76% and the 2-yr yield is down one basis point to 4.35%.

Overseas, the U.K. reported cooler-than-expected CPI for December.

In corporate news:

• JPMorgan Chase (JPM 248.42, +0.95, +0.4%): beats by $0.72, beats on revs; expects ~$90 bln in NII ex. Markets for 2025, as balance sheet growth partially offsets lower rates, 2025 expense outlook is ~$95 bln, expects FY2025 Card Services NCO rate of ~3.6%.
• Wells Fargo (WFC 73.57, +2.38, +3.3%): beats by $0.08, reports revs in-line
• Goldman Sachs (GS 583.60, +11.07, +1.9%): beats by $3.74, beats on revs
• BlackRock (BLK 988.49, +25.32, +2.6%): beats by $0.69, beats on revs
• BNY Mellon (BK 77.89, +1.98, +2.6%): beats by $0.18, beats on revs
• Tesla (TSLA 400.50, +4.14, +1.0%): SEC files lawsuit against TSLA CEO Elon Musk for allegedly not properly disclosing stake in Twitter before his purchase of the company

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region had a mixed showing on Wednesday, showing some apprehension ahead of the release of the U.S. CPI report for December. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: +0.3%, China's Shanghai Composite: -0.4%, India's Sensex: +0.3%, South Korea's Kospi: UNCH, Australia's ASX All Ordinaries: -0.2%.
  • In economic data:
    • Japan's January Reuters Tankan Index 2 (last -1). December Machine Tool Orders 11.2% yr/yr (expected 3.0%; last 9.3%). December M2 Money Stock 1.3% yr/yr (expected 1.2%; last 1.2%)
    • South Korea's December Unemployment Rate 3.7% (last 2.7%). December trade surplus $6.49 bln, as expected (last $5.59 bln). December Imports 3.3% yr/yr, as expected (last -2.4%) and Exports 6.6% yr/yr, as expected (last 1.4%). December Import Price Index 7.0% yr/yr (last 2.8%) and Export Price Index 10.7% yr/yr (last 7.0%)
    • India's December trade deficit $21.94 bln (last deficit of $37.84 bln)
  • In news:
    • Bank of Japan Governor Ueda indicated that next week's policy meeting could result in a rate change.
    • The People's Bank of China injected nearly a trillion yuan through reverse repurchases to offset the impact of tax payments and maturing medium-term loans.
    • South Korea's suspended President Yoon has been arrested over his implementation of martial law in early December.
• Major European indices trade in positive territory with Germany's DAX (+1.0%) leading the way. STOXX Europe 600: +0.8%, Germany's DAX: +1.0%, U.K.'s FTSE 100: +0.8%, France's CAC 40: +0.7%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.7%.
  • In economic data:
    • Eurozone's November Industrial Production 0.2% m/m (expected 0.3%; last 0.2%); -1.9% yr/yr, as expected (last -1.1%)
    • Germany's December WPI 0.1% m/m, as expected (last 0.0%); 0.1% yr/yr (last -0.6%). 2024 GDP -0.2%, as expected (last -0.3%)
    • U.K.'s December CPI 0.3% m/m (expected 0.4%; last 0.1%); 2.5% yr/yr (expected 2.6%; last 2.6%). December Core CPI 0.3% m/m (expected 0.5%; last 0.0%); 3.2% yr/yr (expected 3.4%; last 3.5%). December Input PPI 0.1% m/m (expected 0.2%; last 0.0%); -1.5% yr/yr (expected -1.3%; last -2.1%) and Output PPI 0.1% m/m, as expected (last 0.4%); 0.1% yr/yr (expected 0.0%; last -0.5%)
    • France's December CPI 0.2% m/m, as expected (last -0.1%); 1.3% yr/yr, as expected (last 1.3%)
    • Spain's December CPI 0.5% m/m (expected 0.4%; last 0.2%); 2.8% yr/yr, as expected (last 2.4%). December Core CPI 2.6% yr/yr, as expected (last 2.4%)
  • In news:
    • The U.K. reported cooler-than-expected CPI for December, fueling renewed hopes for a rate cut from the Bank of England.
    • The U.K.'s chief secretary to the Treasury said that there is no need for an emergency spring budget despite the recent weakness in Gilts and the pound.
    • European Central Bank policymaker De Guindos said that the risk has shifted from high inflation to low growth, adding that disinflationary forces are on track.
    • Germany's GDP contracted 0.2% in 2024 after a 0.3% contraction in 2023.