US Stocks Set to Rise After Strong Bank Earnings

U.S. stock futures were mixed on Thursday following a significant rally on Wednesday. Futures for the S&P 500, Nasdaq 100, and Dow Jones are showing positive movement, while the Russell 2000, which measures small-cap stocks, is trading lower in premarket sessions.

Traders reacted to inflation data released on Wednesday, which surpassed expectations and contributed to a widespread increase in stock prices. The Consumer Price Index (CPI) rose by 2.9% year-over-year in December, compared to a 2.7% increase in November, aligning with economists' predictions.

The yield on the 10-year Treasury note stood at 4.66%, whereas the two-year note yielded 4.28%. According to the CME Group’s FedWatch tool, there is a 97.3% likelihood that the Federal Reserve will maintain the current interest rates in the upcoming January 31, 2025 meeting.

Futures	Change (+/-)
Nasdaq 100	0.48%
S&P 500	0.33%
Dow Jones	0.06%
Russell 2000	-0.19%

The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust ETF (QQQ) both posted positive gains in premarket trading on Thursday, with SPY up 0.35% to $594.86 and QQQ climbing 0.45% to $519.01, as per data from Benzinga Pro.

Cues From The Last Session

U.S. stocks witnessed a notable surge on Wednesday, recording their most significant single-day increase since November 6, 2024.

The inflation data revealed a slight rise in consumer prices for December, meeting the expectations of economists. However, this monthly increase was the biggest since March.

Several large banks, including JPMorgan Chase & Co, Goldman Sachs Group Inc, and Citigroup Inc., reported impressive fourth-quarter earnings, with Citigroup also unveiling a substantial share buyback initiative.

Most sectors within the S&P 500 reported gains, particularly in consumer discretionary, communication services, and financial stocks. In contrast, consumer staples stocks faced declines.

The Dow Jones Industrial Average concluded the day with a remarkable gain of roughly 703 points, and both the S&P 500 and Nasdaq Composite experienced significant rises.

Index	Performance (+/-)	Value
Nasdaq Composite	2.45%	19,511.23
S&P 500	1.83%	5,949.91
Dow Jones	1.65%	43,221.55
Russell 2000	1.99%	2,263.29

Insights From Analysts

After the rally, Charlie Bilello, the chief market strategist at Creative Planning, stated in a social media post that approximately one-third of the S&P 500 is now dominated by the so-called "Magnificent Seven" stocks. A chart shared by Bilello indicated that this concentration in these stocks increased to 33.5% from 28% a year ago.

Discussing the inflation data, Collin Martin, director of fixed income strategy at the Schwab Center for Financial Research, said, "The CPI was a step in the right direction, but we’ll need to see additional reports like this to confirm that the disinflationary trend has resumed."

Additionally, Liz Ann Sonders, the chief investment strategist at Charles Schwab, pointed out that the gap between the forward earnings yield of the S&P 500 and the 10-year Treasury yield has hit a new low not seen in 23 years.

According to RMB Capital, U.S. consumers are displaying resilience, while government spending remains unchecked, despite ongoing inflationary pressures and rising interest rates.

"The incoming administration seems focused on the challenging task of promoting economic growth while also reducing the deficit. A crucial part of this effort will be to manage the deficit effectively while keeping long-term yields restrained to avoid hindering economic growth," they added.

Upcoming Economic Data

• Initial jobless claims data for the week ending January 11 will be released on Thursday at 8:30 a.m. ET.
• December's U.S. Retail Sales figures will be announced around the same time.
• The Import Price Index for December is also set for release.
• The Philadelphia Fed Manufacturing Survey for January will come out shortly thereafter.
• At 10:00 a.m. ET, business inventories data for November will be published.
• The Home Builder Confidence Index for January is also scheduled for release.
• On Friday at 8:30 a.m. ET, data regarding Housing Starts and Building Permits for December will be available.
• At 9:15 a.m. ET, figures for Industrial Production and Capacity Utilization for December will be released.

Stocks In Focus:

• Bank of America Corp (BAC) was up 0.38% in premarket trading as Wall Street anticipates it will report quarterly earnings of 77 cents per share on revenue of $25.19 billion before the market opens.
• Morgan Stanley (MS) showed an increase of 1.49% ahead of its earnings report, with analyst expectations of $1.70 per share on revenue of $15.03 billion.
• UnitedHealth Group Inc (UNH) rose 0.4%, with expectations of reported quarterly earnings of $6.72 per share on revenue of $101.76 billion.
• Taiwan Semiconductor (TSM) saw a significant increase of 4.83% following a positive fourth-quarter earnings report that exceeded estimates.
• Synovus Financial Corp (SNV) was up 0.46% after reporting favorable fourth-quarter results.
• BigBear.ai Holdings Inc (BBAI) climbed by 14.45% due to the appointment of Kevin McAleenan as the new CEO, taking over from Mandy Long, who will transition to an advisory role.

Commodities, Gold And Global Equity Markets:

Crude oil futures showed a slight decline of 0.30% during the early New York trading session, trading around $78.47 per barrel.

The gold spot index increased by 0.71% to $2,737.06 per ounce. Meanwhile, the Dollar Index fell by 0.01% to 109.083.

Asian markets ended higher on Thursday, with positive performances noted in Hong Kong’s Hang Seng, India’s S&P BSE Sensex, China’s CSI 300, Australia’s ASX 200, Japan’s Nikkei 225, and South Korea’s Kospi index. European markets are also showing upward trends.

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