Stocks Trade Mixed as CPI, Bank Earnings Hit Simultaneously
S&P 500 futures edge lower as investors parse inflation data and JPMorgan results while awaiting the rest of bank earnings week.
Tuesday brought the most information-dense morning of 2026 so far, and markets are still sorting through it.
S&P 500 futures dropped 0.1% ahead of the open after the Bureau of Labor Statistics released December's Consumer Price Index at 8:30 a.m. ET—the same moment JPMorgan Chase posted quarterly results. The Dow edged lower while Nasdaq futures held near flat.
It's a lot to process. The inflation report confirms what the Fed has been signaling: price pressures aren't fully vanquished, and rate cuts won't come quickly. JPMorgan's strong trading results showed the financial system remains healthy. But the macro picture is what matters for index direction, and that picture just got more complicated.
CPI Came in as Expected
December's headline CPI rose 2.9% year-over-year, ticking higher from November's 2.7% reading. Core inflation—which strips out food and energy—held at 2.7%, matching the Wall Street consensus.
No surprises there, but "no surprises" still means inflation remains above the Fed's 2% target. The report reinforces the case for holding rates steady at the January 27-28 FOMC meeting—a 97% probability according to CME FedWatch going into today.
Shelter costs remain the stubborn component, and used car prices firmed in December after deflating through much of 2025. Neither trend suggests inflation is about to plunge toward target.
For rate cut expectations, this changes little. Markets still see the first cut in May or June at the earliest, with a second cut uncertain before year-end.
Bank Earnings Beat but Stocks Muted
JPMorgan posted adjusted EPS of $5.23 versus $5.00 expected, driven by a 40% surge in equities trading revenue. The stock barely moved. When a beat doesn't spark a rally, it usually means the good news was already priced in.
Delta Air Lines also reported this morning, guiding to 20% earnings growth in 2026. The stock fell 4% anyway—classic "sell the news" after a 48% run last year.
The market's muted reaction to earnings beats suggests investors are more focused on the macro backdrop: inflation, Fed policy, and the ongoing uncertainty around Fed independence.
The Week Ahead
Bank earnings continue tomorrow with Wells Fargo, Bank of America, and Citigroup before the open. Goldman Sachs and Morgan Stanley follow Wednesday. The results will fill in the picture JPMorgan started painting—strong capital markets activity offsetting pressure on net interest income.
But the bigger story this week may not be earnings at all. The DOJ's investigation into Fed Chair Powell and Trump's credit card rate cap proposal continue to generate headlines. Senator Thom Tillis announced he'll block all Federal Reserve nominees until the administration clarifies its approach to central bank independence.
Treasury yields held steady Tuesday morning, with the 10-year around 4.75%. The yield curve remains inverted at the short end, reflecting expectations that the Fed will eventually cut but not anytime soon.
Key Levels to Watch
The S&P 500 sits just below its all-time high of 6,977, set last Friday. A close above that level would extend the January rally. A failure to hold 6,900 would suggest profit-taking has more room to run.
The VIX remains subdued around 14, indicating options traders aren't pricing in significant near-term volatility. That's surprising given the policy uncertainty, but it also means protection is cheap if you want it.
Volume is picking up from the thin holiday period, which should provide better signal on where institutional money is flowing. So far, the signal is "wait and see."