JPM lifts Dow as Europe splutters

Europe took a bit of a dive after the open, before bulls staged a rear-guard action that sent the major bourses green by mid-morning. Heading into the US session open the major indices are flat. Some probing going on but nothing sustained. You can characterise today's session as indecisive, lacking direction as we await the details of the US-China trade deal.

US earnings are on deck with the banks kicking off the Q4 reporting season. Twenty-four S&P 500 companies report earnings this week. Dow futures were flat to negative ahead of the cash open but started to tick higher after JPMorgan's earnings were better than expected. Assuming Citigroup doesn't upset the gravy train we could see Dow 29k today again. Banks were higher across the board following JPM's results – it may be that analysts missed the bump up in trading revenues in the quarter.

JPMorgan Chase & Co beat on the top and bottom line just as it did last quarter. Earnings per share came in at $2.57, vs $2.32 expected. Revenues also beat, rising 9% to $29.2bn vs expected $28bn. The key is the US consumer, who remains strong. Lower interest rates are depressing earnings, with net interest income down 2% to $14.3bn. Net interest margin compressed just a touch.

It was a knockout quarter for the investment bank, with a very strong performance in bond and equity trading helping to deliver a record Q4 for the division. Net income was $2.9 billion, up 48%, while net revenue rose 315 to $9.5 billion. Bond trading revenues leapt 86% to $3.4bn, vs $2.5bn expected.

Citigroup was yet to report as of send time. It's expected to deliver a 14% increase in earnings with adjusted EPS seen at $1.84. Wells Fargo & Co is also due today. EPS is seen at $1.10 based on 22 estimates.

Banks are coping with lower interest rates than they'd planned for this time a year ago. The Fed has cut three times and US 10s are back to 1.8% - not that long ago Wall Street was looking at 3.25%. However, from a point of inversion, the yield curve has steepened since the middle of last year, offering respite to bank earnings.

Meanwhile, Delta Airlines beat handsomely with EPS at $1.70 bs $1.40 expected.

Apple downgraded? Surely some mistake? But no, the stock was downgraded to neutral at Atlantic, on valuation concerns following the recent ramp in the stock. Certainly, multiple expansion has – like the rest of the S&P 500 – been the key driver of the shares' rally. According to Atlantic, the upside from the 5G cycle has been fully priced now. Arguably this misses the point that multiple expansion is more about the pivot to Services from iPhone sales, which may still have room to run. Shares are flat pre-mkt.

Just a few days after we noted Tesla leaping to $472, the stock has enjoyed yet more positive momentum to reach record highs at $524 after receiving a significant price target upgrade at Oppenheimer. Analysts at the broker raised the PT to $612, a Street high, driving the stock 10% higher yesterday. Jefferies and Deutsche Bank have followed suit with PT upgrades to $600 and $455 respectively. Pre-mkt indicators suggests c+2% gains today to $536. Oppenheimer analysts Colin Rusch raised his PT from $385 in the belief that the company has reached ‘critical scale' sufficient to support positive free cash flow.

Elsewhere, WTI oil has bounced off its 200-day moving average around $57.70 to claw back the $58 handle.

USDJPY continues to flirt with 1.10. GBPUSD has struggling to hold gains after recovering to 1.30 earlier. Last look it was back to 1.2980.

US CPI on tap at 13:30 GMT - CPI MoM for Dec seen at +0.3%, flat from the previous month, with core at +0.2%. This would equate to year-on-year inflation of 2.4%, up from 2.1% the previous month, with core seen steady at 2.3%.