U.S. CPI rises to 2.9%, UK Inflation Eases; Strong Earnings Boost Citigroup, BlackRock Among Others | MarketReader Minute

U.S. CPI expected to rise 2.9% in December, influencing Fed interest rate decisions as UK inflation eases and global equities gain amid geopolitical tensions.

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Wednesday, January 15

Noteworthy macro moves today: S&P 500 Index (US) +1.4%. US 10Y Treasury Bond +0.7%. Nasdaq 100 Index (US) +1.6%. Noteworthy US mega-cap moves today: Tesla Inc (TSLA) +3.7%. Broadcom Inc (AVGO) +2.3%. Amazon.com Inc (AMZN) +2.1%.

Recent economic data releases have significantly influenced market sentiment, particularly the U.S. Consumer Price Index (CPI) for December 2024, which showed a year-over-year increase of 2.9%. This figure was slightly above expectations and indicates persistent inflationary pressures. As a result, speculation regarding future Federal Reserve interest rate cuts has emerged as traders adjust their positions in anticipation of how this will affect monetary policy moving forward.

In the UK, core inflation unexpectedly eased to 3.2% from previous levels while headline CPI dropped to 2.5%. These developments are prompting increased odds that the Bank of England may cut rates at its upcoming meeting in February due to signs suggesting cooling price pressures within an uncertain economic environment exacerbated by potential trade tensions with the incoming Trump administration.

Global equity markets reacted positively following these reports; major indices such as S&P futures rose sharply ahead of earnings season kick-off featuring significant banks like JPMorgan Chase and Goldman Sachs reporting results today amidst ongoing discussions about tariff policies under President-elect Trump's administration that could further impact financial conditions across various sectors.

SPDR Dow Jones Industrial Average ETF Trust (DIA) [+1.5%]
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has experienced a price increase of 1.5% in pre-market trading on Wednesday. This movement coincides with the broader market's upward trend, as the S&P 500 Index has also risen by 1.35%. Recent CPI data released yesterday met expectations, with core CPI rising less than anticipated, which typically supports positive market sentiment. Additionally, significant contributors to DIA's performance include Goldman Sachs, which reported strong Q4 results, and Microsoft, which is implementing a hiring freeze while launching a new quantum computing program. The NY Empire State Manufacturing Index reported a sharp decline, yet this did not significantly affect market movement. Overall, these developments reflect a more favorable trading environment for DIA amidst mixed economic indicators.

Financial Select Sector SPDR Fund (XLF) [+1.9%]
The Financial Select Sector SPDR Fund (XLF) has risen by 1.9% in pre-market trading, buoyed by the release of U.S. Consumer Price Index (CPI) data, which showed a month-over-month increase of 0.4% and an annual rise of 2.9%, slightly above expectations. Core CPI increased by only 0.2%. This mixed inflation report has sparked optimism regarding potential Federal Reserve rate cuts. Strong earnings from major banks, including JPMorgan Chase, have further supported the financial sector's performance. Social media discussions have noted XLF's increase following these earnings, with significant contributions from stocks like JPMorgan and Bank of America. Additionally, the Dow Jones Index has also risen, reflecting broader market sentiment that may be influencing XLF's performance. Meanwhile, the French Central Bank has cautioned that financial deregulation in the U.S. could elevate crisis risks, highlighting ongoing concerns within the sector.

C | +3.5% | +5.1B
Citigroup Inc | Diversified Banks

Citigroup Inc. reported its Q4 2024 earnings, revealing an adjusted EPS of 1.34, surpassing analyst estimates of 1.22. Quarterly sales reached 19.58 billion, exceeding the consensus estimate of 19.48 billion and marking a significant increase from 17.44 billion in the same period last year. The company announced a substantial 20 billion share repurchase program and posted a net income of 2.9 billion, a notable recovery from a loss of 1.8 billion in the prior year. Citigroup's common equity tier 1 ratio stood at 13.6%. Discussions on social media highlighted the strong performance in market revenue, which reached 4.58 billion, above the estimated 4 billion. Fixed income, currencies, and commodities sales and trading revenue was reported at 3.48 billion, exceeding the estimate of 2.94 billion, while equities sales and trading revenue slightly surpassed expectations at 1.10 billion.

BLK | +3.6%| +5.4B
BlackRock Inc | Asset Management & Custody Banks

BlackRock Inc reported robust fourth-quarter earnings, with adjusted earnings per share of $11.93, exceeding the consensus estimate of $11.21. Quarterly revenue reached $5.68 billion, surpassing expectations of $5.53 billion and reflecting a significant increase from the previous year. The firm achieved record net inflows of $281 billion in Q4, contributing to total net inflows of $641 billion for 2024. Assets under management rose to $11.55 trillion, marking a 15% year-over-year increase. Adjusted operating income climbed to $2.33 billion, up from $1.72 billion last year, resulting in an operating margin of 45.5%. Positive sentiment surrounding these results has coincided with a pre-market price increase of approximately 3.6%.

WFC | +3.2% | +8.3B
Wells Fargo & Co | Diversified Banks

Wells Fargo & Co shares are up notably following the announcement of its Q4 2024 earnings. The bank reported a GAAP EPS of 1.43, surpassing the estimated 1.34, while revenue reached 20.38 billion, slightly below the forecast of 20.59 billion. Net interest income was reported at 11.84 billion, exceeding expectations of 11.7 billion. The return on equity stood at 11.7%, outperforming the anticipated 11%. CEO Charlie Scharf emphasized the solid performance and noted that approximately 25 billion was returned to shareholders. Additionally, the provision for credit losses was reported at 1.10 billion, better than the estimated 1.22 billion. Looking ahead, Wells Fargo expects net interest income for 2025 to rise by 1% to 3% compared to 2024. Following these announcements, shares experienced an increase of about 2.5% in pre-market trading.

BK | +2.9%| +1.7B
Bank of New York Mellon Corp | Asset Management & Custody Banks

Bank of New York Mellon Corp reported robust fourth-quarter results, with adjusted earnings per share at $1.72, exceeding the consensus estimate of $1.56. Revenue reached $4.85 billion, surpassing expectations of $4.66 billion and marking an 11% year-over-year increase. Notably, net interest income rose by 8%, bolstered by higher portfolio yields. The firm announced a common stock dividend of $0.47 per share, payable on February 7, 2025. Total fee revenue for the quarter increased by 9% to $3.51 billion, and the company achieved a return on tangible common equity of 23% for the year. Concurrently, BlackRock Inc experienced a notable increase following its strong fourth-quarter results, which may correlate with Bank of New York Mellon's recent performance, reflecting their historical market behavior.

GS | +2.0% | +3.7B
Goldman Sachs Group Inc | Investment Banking & Brokerage

Goldman Sachs Group Inc reported a strong fourth-quarter performance, with net revenue reaching approximately $13.87 billion, exceeding the consensus estimate of $12.37 billion. Earnings per share (EPS) were notably higher at $11.95, surpassing expectations of $8.21. The firm highlighted significant growth in key areas, including a 24% increase in investment banking fees and a 33% rise in global banking and markets revenue. FICC sales and trading revenue was reported at $2.74 billion, above the estimated $2.44 billion. Additionally, net interest income also exceeded forecasts at $2.35 billion compared to the estimated $2.11 billion. The French Central Bank has cautioned that U.S. financial deregulation could heighten crisis risks, mentioning Goldman Sachs among other institutions of interest. Meanwhile, BlackRock Inc experienced a notable price movement following its own strong fourth-quarter results, which may be correlated with Goldman Sachs' performance.

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