US Stocks To Open Higher Ahead Of December Inflation Data: All Eyes On Banking Stocks As JPMorgan, Goldman, Citi, Wells Fargo Report Quarterly Earnings

U.S. stock futures advanced on Wednesday following Tuesday’s mixed close. Futures of all four major indices rose in premarket trade.

Traders await the December Consumer Price Index will provide fresh insights into inflation’s trajectory, potentially influencing the Federal Reserve's policy stance amid mounting uncertainty over interest rates.

The headline inflation rate is projected to rise 2.9% year-over-year, according to TradingEconomics, marking an increase from November’s 2.7% pace. On a monthly basis, headline inflation is expected to grow by 0.3%, maintaining the same pace as the prior month.

Amid rotation, technology stocks dragged the Nasdaq down on Tuesday as well, whereas Dow Jones, which has the least number of tech constituents, rose over 220 points.

The 10-year and two-year Treasury notes yielded 4.77% and 4.35%, respectively. The probability of having no change in the interest rates for the upcoming Jan. 31, 2025 decision was at 97.3%, according to CME Group’s FedWatch tool.

Futures	Change (+/-)
Nasdaq 100	0.22%
S&P 500	0.14%
Dow Jones	0.18%
Russell 2000	0.51%

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was up 0.18% to $583.22 and the Invesco QQQ Trust ETF QQQ rose 0.23% to $506.25, according to Benzinga Pro data.

Cues From The Last Session

U.S. stock market closed with a mixed performance on Tuesday. The Dow Jones Industrial Average saw a significant intraday surge following the release of Producer Price Index data.

PPI increased by 0.2% in December, lower than the expected 0.3% and November’s 0.4% increase. This positive economic indicator boosted investor sentiment.

However, Big Tech stocks weighed heavily on the Nasdaq. Nvidia Corp. NVDA and Meta Platforms Inc. META experienced notable declines, contributing to the index’s negative performance.

Sectoral performance was varied across the S&P 500. Utilities, materials, and financial sectors closed higher, while communication services and healthcare sectors underperformed.

Index	Performance (+/-)	Value
Nasdaq Composite	-0.23%	19,044.39
S&P 500	0.11%	5,842.91
Dow Jones	0.52%	42,518.28
Russell 2000	1.13%	2,219.24

Insights From Analysts

Howard Marks, a veteran investor who accurately predicted the dot-com bubble, warns of potential market risks in his latest memo, “On Bubble Watch.”

Marks highlights several concerning signs:

Over-optimism: High market exuberance and elevated S&P 500 valuations.
AI Hype: Excessive enthusiasm for AI may be inflating valuations in the tech sector.
Magnificent 7 Reliance: Over-reliance on the continued success of a small group of dominant tech companies.
Index Investing Bias: Index fund inflows may be driving up prices regardless of intrinsic value.

While not definitively declaring a bubble, the co-founder and co-chairman of Oaktree Capital Management, Marks stresses the importance of acknowledging these risks. He acknowledges counterarguments, such as reasonable valuations for the “Magnificent Seven” and a moderate P/E ratio for the S&P 500.

Ultimately, Marks concludes that the market may be expensive and slightly overheated, but it doesn’t yet display the irrational exuberance typical of a true bubble.

“The markets are likely to remain listless until Monday’s Inauguration Day, when President Donald Trump is expected to issue numerous Executive Orders which might muddy rather than clarify the economic outlook,” said Ed Yardeni of Yardeni Research in his QuickTakes.

Carson Research in their 2025 markets outlook, released on Tuesday said that they expect U.S. growth likely to outpace other global economies this year. They expect a 12-15% return from stocks.

“Looking at forward 12-month S&P 500 earnings we once again see new highs, now at $271 per share, up from $225 in early 2023,” the report said.

“We are overweight equities and believe current forward earnings growth expectations remain supportive of stock gains given the economic backdrop.”

See Also: How to Trade Futures

Upcoming Economic Data

On Wednesday, the headline and core consumer price index for December and the Empire State manufacturing survey data for January will be announced at 8:30 a.m., ET.
Richmond Fed President Barkin will speak at 9:00 a.m., ET.
New York Fed President Williams will speak at 11:00 a.m., ET.
Chicago Fed President Goolsbee will speak at noon, ET.
On Thursday, initial jobless claims till Jan. 11 will be released at 8:30 a.m., ET.
December’s U.S. retail sales, import price index, and Philadelphia Fed manufacturing survey will be announced at 8:30 a.m., ET.
Business inventory data for November and the Home builder confidence index for January will be released at 10:00 a.m., ET.
On Friday, housing starts and building permits data for December will be released at 8:30 a.m., ET.
The industrial production and capacity utilization for December will be announced at 9:15 a.m., ET.

Stocks In Focus:

JPMorgan Chase & Co JPM was up 0.21% in premarket on Wednesday as Wall Street expects it to report quarterly earnings of $4.04 per share on revenue of $41.56 billion before the opening bell.
Wells Fargo & Co WFC was up 2.39% ahead of its earnings before the opening bell. Analysts expect it to report quarterly earnings of $1.35 per share on revenue of $20.58 billion.
Goldman Sachs Group Inc GS was up 0.26% as analysts expect it to post quarterly earnings of $8.35 per share on revenue of $12.46 billion before the opening bell.
Citigroup Inc C was up 0.39% ahead of its earnings before the opening bell. Analysts expect it to post quarterly earnings of $1.24 per share on revenue of $19.51 billion. The company will release earnings before the markets open.
Applied Digital Corp APLD was down 6.21% despite beating the second-quarter revenue and EPS estimates on Tuesday.
Safe & Green Holdings Corp SGBX was up 122.22% as it decided to acquire 100% of New Asia Holdings, including its subsidiaries Olenox Corp and Machfu.com.
Vision Marine Technologies Inc VMAR was up 46.43% after it filed its patent application with the United States Patent and Trademark Office for a Battery Authentication Encryption Technology.

Commodities, Gold And Global Equity Markets:

Crude oil futures were trading higher in the early New York session by 0.62% to hover around $76.84 per barrel.

The gold spot index was up by 1.04% to $2,710.19 per ounce. The Dollar Index was down 0.20% at 109.050 level.

Asian markets closed mixed on Wednesday as Hong Kong’s Hang Seng, and India’s S&P BSE Sensex index advanced. Whereas, China’s CSI 300, Australia’s ASX 200, Japan’s Nikkei 225, and South Korea’s Kospi index fell. European markets were also trading higher.

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