(Jan 14): A slide in US stocks continued Wednesday as a flurry of economic data failed to change any expectations for the Federal Reserve’s interest-rate path and traders digested the latest round of big bank earnings.
The S&P 500 Index fell 0.7% at 9.58am in New York, extending declines for a second-straight day and putting the benchmark on track for its first back-to-back decline of the year. The tech-heavy Nasdaq 100 Index dropped 1%, also adding to losses from Tuesday’s session.
Wholesale inflation picked up slightly in November from a month earlier, driven by a jump in energy costs. The producer price index rose 0.2% after climbing 0.1% in the prior month, according to the Bureau of Labor Statistics.
While the data was stronger than expected, it “likely doesn’t change anything for the Federal Reserve”, said Clark Bellin, president and chief investment officer at Bellwether Wealth. “We expect the Federal Reserve to remain on hold for the next six months and then cut rates by one or two times in the second half of 2026.”
Meanwhile, retail sales in November rose more than forecast, fuelled by a rebound in car buying and holiday sales. The value of retail purchases, not adjusted for inflation, increased 0.6% after a downwardly revised 0.1% drop in October, Commerce Department data showed Wednesday.
Geopolitics weighed on traders’ minds as the unrest in Iran continued. Oil has reached the highest level since October as the market awaited the US response to the situation. President Donald Trump has been ratcheting up military threats, while Reuters reported some personnel have been advised to leave the US air base in Qatar.
See also: Stocks wipe out CPI-fuelled gains as JPMorgan sinks
Bank earnings are key
Big bank earnings continued to roll in. Citigroup Inc advanced after reporting a surge in financial advisory fees, capping off a year where revenue from handling mergers rose to an all-time record, counter to the relatively sluggish growth reported by JPMorgan Chase & Co a day earlier.
Despite Bank of America Corp’s equity traders posting their best quarter ever, shares in the lender declined. Meanwhile, Wells Fargo & Co fell after reporting net interest income and revenue that were slightly below consensus estimates.
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Expectations for earnings season are “very high”, according to Miller Tabak’s Matt Maley, adding that is one of the key reasons for Wall Street’s bullish view on 2026.
“If the earnings/guidance merely meets expectations over the coming weeks and does not create a wave of earnings estimate increases, it could create some problems for the stock market,” Maley said.
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