U.S. equity futures powered higher in early Wednesday trading, while the dollar eased and Treasury yields fell, as investors picked through details of a crucial December inflation report that could define the market's direction over the coming weeks.
Updated at 8:40 AM EST
Inflation shock
U.S. inflation ticked higher in December, but core price price pressures eased, potentially sparking a relief rally in stocks tied to renewed bets on Federal Reserve rate cuts.
The Commerce Department said its headline Consumer Price Index for December was pegged at an annual rate of 2.9%, accelerating from the 2.7% pace recorded in November and reaching the highest level since early last year.
So-called core inflation, which strips out volatile components like food and energy, eased to an annual rate of 3.2%, just inside Wall Street's 3.3% forecast and to the lowest rate in more three years.
U.S. stocks added to gains following the data release, with futures contracts tied to the S&P 500 suggesting an 82 point opening bell gain and those linked to the Dow Jones Industrial Average priced for a 600 point surge. The tech-focused Nasdaq, meanwhile, is called 355 points higher.
Benchmark 2-year Treasury note yields eased 7 basis points to 4.285% while 10-year notes slipped 5 basis points to 4.702%.
Updated at 7:49 AM EST
Gold in Goldman
Goldman Sachs shares jumped higher after topping Street earnings forecasts and following its Wall Street rivals with a surge in dealmaking fees over the three months ending in December.
Goldman posted earnings of $11.95 per share, a 120% increase from the year-ago period that smashed Wall Street's $8.22 forecast. Investment banking and markets fees rose 33% to $8.48 billion.
Goldman shares were marked 2.1% higher in premarket trading to indicate an opening bell price of $583.50 each.
Updated at 7:06 AM EST
Bank on it
JP Morgan kicked off the bank earnings season with stronger-than-expected fourth quarter profits as dealmaking help boost the group's bottom line and offset an overall slide in net interest income tied to lower Federal Reserve interest rates.
JP Morgan JPM said earnings for the three months ending in December were pegged at $14.005 billion, or $4.81 per share, up 58.2% from the prior-year period and well ahead of the Street consensus forecast of $4.11 per share
Net interest income was $23.5 billion, down 2.9% from the year-ago period but investment banking revenue rose 46% to $2.6 billion.
JP Morgan shares were marked 3.5% higher in premarket trading immediately following the earnings release to indicate an opening bell price of $255.75 each.
Wells Fargo was also on the move after its fourth quarter update, which showed both better-than-expected overall profits and a 59% surge in dealmaking fees.
Shares in the group were last marked 2.4% higher in premarket at $72.88 each.
Stocks closed modestly higher on Tuesday, with the S&P 500 edging just 6.7 points into the green on a chopping trading day that was complicated by uncertainty over President-elect Donald Trump's tariff plans and a producer price inflation reading that included some stubborn price pressures.
Treasury yields were largely unmoved over the session, but eased modestly overnight ahead of today's December inflation report, which is expected to show a pickup in headline pressures while core consumer prices remain largely unchanged.
A hotter-than-expected reading, however, could fan concern that faster inflation will limit the Federal Reserve's ability to lower borrowing rates this year, pushing Treasury yields higher and stiffening the headwind for U.S. stocks.
Federal Reserve Chairman Jerome Powell and his colleagues will be closely trading the December inflation report ahead of their policy meeting next week in Washington.ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
"US equities may now need clear relief from hawkish policy to make a sustained move higher,” said Goldman Sachs strategist Dom Wilson. “We think equities may remain more fragile until we reverse the perception that the Fed put is now struck lower.”
A quartet of big bank earnings is also on today's active slate, with fourth quarter updates from JPMorgan Chase (JPM) , Citigroup (C) , Wells Fargo (WFC) and Goldman Sachs Group (GS) .
LSEG data suggests financial sector earnings will grow 22.7% from the prior-year period and contribute around 17.5% of the collective $519.9 billion forecast for S&P 500 profits over the fourth quarter.
Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest a modest 11 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 100 point bump.
The tech-focused Nasdaq is called 55 points higher with Nvidia (NVDA) , Tesla (TSLA) and Trump Media & Technology (DJT) shares active in premarket trading.
In overseas markets, a surprise slowdown in U.K. inflation, which was pegged at 2.5% over the month of December, eased some of the recent upward pressure on government bond yields and helped the FTSE 100 jump 0.72% in mid-day London trading.
The regional Stoxx 600 benchmark rose 0.34% in Frankfurt.
Overnight in Asia, Japan's Nikkei 225 finished modestly in the red, falling 0.07% on the session, while the MSCI ex-Japan benchmark slipped 0.03% lower into the close of trading.
