US equity futures advance after CPI shows rising inflation
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UPGRADE- June CPI shows inflation rising off May's lows.
- US equity futures rise as CPI inflation bleeds into share prices.
- Headline CPI for June jumps from 2.4% to 2.7%.
- Banks mostly exceed earnings expectations, but Wells Fargo cuts guidance.
Inflation in the Consumer Price Index (CPI) data for June reared its ugly head once again. Both headline and core inflation rose off May's numbers as headline inflation came in line with consensus, and core figures rose but came in behind consensus.
The annual core CPI for June arrived at 2.9%, higher than May's 2.8% but lower than the 3.0% consensus. Headline CPI arrived at 2.7%, in-line with expectations and well above May's 2.4%.
The Dow Jones futures remained slightly negative, while the S&P 500 futures gained 0.45%, and the NASDAQ 100 futures surged 0.75%. Inflation, while disliked, also supports asset prices and often moves them higher. A large part of the equity market's recovery to new highs off April's lows can be attributed to the US Dollar cratering amid expectations of higher price levels caused by the Trump administration's tariff policy.
Deutsche Bank and others had warned earlier this week that the tariff hikes would begin to be reflected in CPI data starting this month. While importers have large pre-tariff inventories to move first, rising tariff government revenues tell us the policies are beginning to grow in effect. So far this year, the US has collected over $100 billion in tariffs.
With recent announcements of 30% tariffs on the European Union (EU), Mexico and Canada, as well as 25% tariffs on Japan and South Korea, all scheduled to begin August 1, economists expect June's higher inflation figures to continue gaining steam in subsequent months.
Banks kick off earnings season
Although Fastenal's (FAST) earnings beat on Monday was the technical start to earnings season, major banks on Tuesday are viewed as the opening salvo. Earnings largely beat consensus on Tuesday, helping to buoy stock indices.
JPMorgan (JPM) led the way with a major earnings beat. The largest bank in the US unveiled $4.96 in adjusted earnings per share (EPS), 48 cents ahead of the Wall Street consensus. Revenue of $45.7 billion was $1.66 billion above projections.
Citigroup (C) was in a similar boat as the bank earned 35 cents above consensus at $1.96 in adjusted EPS. Revenue of $21.7 billion was $740 million above expectations.
Wells Fargo (WFC) stock sank nearly 4% in the premarket, however, as the bank trimmed guidance for this year's net interest income. For the full year 2025, management now expects net interest income to be in line with 2024's $47.7 billion, about $200 million behind its earlier guidance.
JPM, C, WFC year-to-date stock chart
- June CPI shows inflation rising off May's lows.
- US equity futures rise as CPI inflation bleeds into share prices.
- Headline CPI for June jumps from 2.4% to 2.7%.
- Banks mostly exceed earnings expectations, but Wells Fargo cuts guidance.
Inflation in the Consumer Price Index (CPI) data for June reared its ugly head once again. Both headline and core inflation rose off May's numbers as headline inflation came in line with consensus, and core figures rose but came in behind consensus.
The annual core CPI for June arrived at 2.9%, higher than May's 2.8% but lower than the 3.0% consensus. Headline CPI arrived at 2.7%, in-line with expectations and well above May's 2.4%.
The Dow Jones futures remained slightly negative, while the S&P 500 futures gained 0.45%, and the NASDAQ 100 futures surged 0.75%. Inflation, while disliked, also supports asset prices and often moves them higher. A large part of the equity market's recovery to new highs off April's lows can be attributed to the US Dollar cratering amid expectations of higher price levels caused by the Trump administration's tariff policy.
Deutsche Bank and others had warned earlier this week that the tariff hikes would begin to be reflected in CPI data starting this month. While importers have large pre-tariff inventories to move first, rising tariff government revenues tell us the policies are beginning to grow in effect. So far this year, the US has collected over $100 billion in tariffs.
With recent announcements of 30% tariffs on the European Union (EU), Mexico and Canada, as well as 25% tariffs on Japan and South Korea, all scheduled to begin August 1, economists expect June's higher inflation figures to continue gaining steam in subsequent months.
Banks kick off earnings season
Although Fastenal's (FAST) earnings beat on Monday was the technical start to earnings season, major banks on Tuesday are viewed as the opening salvo. Earnings largely beat consensus on Tuesday, helping to buoy stock indices.
JPMorgan (JPM) led the way with a major earnings beat. The largest bank in the US unveiled $4.96 in adjusted earnings per share (EPS), 48 cents ahead of the Wall Street consensus. Revenue of $45.7 billion was $1.66 billion above projections.
Citigroup (C) was in a similar boat as the bank earned 35 cents above consensus at $1.96 in adjusted EPS. Revenue of $21.7 billion was $740 million above expectations.
Wells Fargo (WFC) stock sank nearly 4% in the premarket, however, as the bank trimmed guidance for this year's net interest income. For the full year 2025, management now expects net interest income to be in line with 2024's $47.7 billion, about $200 million behind its earlier guidance.
JPM, C, WFC year-to-date stock chart
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