U.S. stocks opened essentially flat on Tuesday evening, Beijing time. The December Consumer Price Index (CPI) rose 2.7% year-over-year, aligning with expectations. The official start of the fourth-quarter earnings season for U.S. stocks is being marked by numerous financial companies scheduled to report their results this week.
The Dow Jones Industrial Average climbed 26.75 points, or 0.05%, to 49,616.95; the Nasdaq Composite dipped 1.505 points, or 0.01%, to 23,732.399; and the S&P 500 edged up 0.14 points to 6,977.41. Following a December jobs report that indicated a slightly weaker yet still stable labor market—a factor that might lead the Federal Reserve to pause on interest rate cuts—market attention has shifted squarely onto the CPI data. The CPI report released early Tuesday provides a more comprehensive picture of the price fluctuations caused by the prolonged U.S. government shutdown last autumn. Data showed that U.S. consumer prices increased by 2.7% in December compared to the same month a year prior, matching the average forecast from economists surveyed by Dow Jones. This trend is consistent with the lower-than-expected CPI results observed in November. According to the CME FedWatch Tool, pricing in federal funds contracts indicates that the market anticipates the Federal Reserve will initiate two 25-basis-point rate cuts this year, starting in June. "With the Bureau of Labor Statistics now back to normal operations, investors will be watching closely to see if the recent trend of moderating inflation can be sustained," said Angelo Kourkafas, Senior Global Strategist at Edward Jones. "The recent rebound in goods prices from relatively low levels may reflect the pass-through of tariff-related costs. In contrast, services inflation has already shown positive signs of gradual easing. We expect that cooling labor market conditions will help further alleviate services inflation into 2026." As the earnings season gets underway, investors are also focusing on the performance of U.S. corporations. Banking giant JPMorgan Chase saw its stock rise after reporting better-than-expected fourth-quarter profits, whereas Delta Air Lines fell more than 3% due to mixed earnings results. Bank of America, Citigroup, and Morgan Stanley are expected to report their earnings later this week. Hank Smith, Chief Investment Officer at Haverford Trust, anticipates strong bank earnings. He noted that large banks are likely to benefit from tailwinds such as accelerating economic growth, regulatory easing, and robust credit, combined with a steepening yield curve that should boost profitability. U.S. stocks closed higher on Monday. The S&P 500 and the Dow both reached new all-time highs as investors temporarily looked past news of a criminal investigation into Federal Reserve Chairman Jerome Powell by the U.S. Department of Justice. The Russell 2000 index also hit a record high. Robin Vince, CEO of BNY Mellon, stated that the Justice Department's action against the Fed is "counterproductive" to the Trump administration's goals of boosting the U.S. economy and prioritizing affordability. Speaking on a media conference call Tuesday, Vince said the Fed's independence has long been greatly beneficial to the economy and capital markets, and undermining this foundation of the U.S. bond market could run counter to the White House's objectives. "Questioning one of the fundamental principles of the bond market could, in fact, be counterproductive," he pointed out. "Taking action that undermines that agenda right now does not seem prudent."
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