Inflation Data, Earnings Season Keep Wall Street Steady/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock indexes held close to record highs Tuesday as fresh inflation data hinted at possible interest rate cuts in 2026. Mixed earnings from major firms like JPMorgan Chase and Delta Air Lines helped shape a cautious market mood. Bond yields dipped slightly while analysts await deeper corporate results.
Wall Street Earnings 2026 Quick Looks
- U.S. stock markets hover near all-time highs
- S&P 500 ticks up 0.1% in early trading
- Dow dips 90 points while Nasdaq edges higher
- Bond yields ease as inflation data supports possible Fed rate cuts
- U.S. inflation rose 2.7% in December, slightly above forecasts
- Core inflation trend cooler than expected, boosting Fed cut hopes
- Fed seen likely to cut rates later in 2026, not this month
- JPMorgan Chase reports weaker-than-expected earnings due to Apple Card hit
- Delta Air Lines beats profit estimates but falls short on revenue
- L3Harris gains 3.6% after IPO announcement of missile business
- Mixed performance across global markets; Japan’s Nikkei hits new record
Deep Look: Inflation Data, Earnings Season Keep Wall Street Steady
NEW YORK — Wall Street stayed close to record highs on Tuesday as investors digested fresh inflation data and corporate earnings reports, both of which could shape the Federal Reserve’s path on interest rates in the months ahead.
The S&P 500 nudged up by 0.1% in early morning trading, building on its recent record. Meanwhile, the Dow Jones Industrial Average slipped 90 points, or 0.2%, and the Nasdaq Composite rose 0.2%. The cautious movements reflected investor uncertainty as the 2026 earnings season officially kicked off.
Bond markets responded to the latest inflation numbers by nudging yields slightly lower. The data suggested that although prices remain elevated, the overall trend in core inflation may give the Fed more room to cut interest rates later this year. The 10-year Treasury yield eased to 4.16% from 4.19% late Monday, while the two-year yield, which closely reflects expectations for Fed policy, edged down to 3.52% from 3.54%.
Traders are increasingly betting that the Federal Reserve may lower interest rates at least twice in 2026 to support a slowing labor market. However, the likelihood of any move at the upcoming Fed meeting this month remains low. CME Group data showed only a modest increase in the probability of a January cut, now pegged at just 5%.
Tuesday’s inflation report revealed that consumer prices rose by 2.7% in December compared to the previous year, slightly above economist projections and the Fed’s 2% target. Prices for essentials like gasoline and groceries were key contributors. Still, a more encouraging measure of underlying inflation — which excludes volatile food and energy prices — came in cooler than expected, boosting confidence that inflation may not be re-accelerating.
“We’ve seen this movie before—inflation isn’t reheating, but it remains above target,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. Her comment reflects broader Wall Street sentiment that while inflation persists, it may not derail the Fed’s flexibility.
Corporate earnings also played a role in the market’s muted tone. Analysts are forecasting an 8.3% year-over-year increase in S&P 500 earnings per share, according to FactSet. However, early results offered a mixed picture.
JPMorgan Chase kicked off earnings season by reporting weaker-than-expected profits and revenues for the final quarter of 2025. Some analysts had not accounted for a one-time charge related to the bank’s acquisition of Apple Card’s credit portfolio.
Despite this, CEO Jamie Dimon struck a positive note, saying, “Consumers continue to spend, and businesses generally remain healthy.” Still, JPMorgan shares slipped 0.6% after the report.
Delta Air Lines reported stronger-than-expected earnings but fell short on revenue and issued a modest profit forecast for 2026. Its shares dipped 0.5% as investors processed the mixed outlook. While travel demand remains steady, concerns over rising costs and softening margins linger for the airline industry.
On the upside, defense contractor L3Harris Technologies saw its stock jump 3.6%. The company announced plans to spin off its missile division through an initial public offering later this year. The U.S. government will invest $1 billion into the new company, which will convert to common shares post-IPO. L3Harris will retain majority ownership after the separation.
Global markets showed mixed performance. European and Asian indices posted varied results, with Japan’s Nikkei 225 surging 3.1% to reach a new record, driven by strength in technology-related stocks. The rally highlighted growing investor optimism in Asia’s leading economy, especially in sectors tied to semiconductors and innovation.
As the 2026 earnings season unfolds, Wall Street’s attention will remain fixed on how companies navigate cost pressures, global demand shifts, and Fed policy expectations. While inflation data suggests the economy is slowly stabilizing, businesses will need to post strong financial results to justify lofty stock valuations.
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