CPI Sets the Tone as Markets Navigate Policy and Earnings Risk

Pre-Market Snapshot

Markets are steady ahead of two overlapping catalysts: December CPI and elevated policy-related headline sensitivity surrounding the Federal Reserve. Either would typically dominate attention. Today, both influence positioning.

News to Know

Economic Data: CPI

December CPI is released at 8:30 a.m. ET. This is the first uninterrupted inflation read since last fall’s data disruptions.

• Consensus:

  • Headline CPI: 2.7% YoY

  • Core CPI: 2.7% YoY

• Risk framing:

  • Firmer core inflation would challenge current rate-cut timing assumptions.

  • A cooler print would reinforce existing expectations but does not remove downside risk tied to positioning.

• Rates context:

  • January policy expectations remain largely unchanged.

  • The first cut is still expected later in the first half of the year, though timing remains data-dependent.

Federal Reserve Headline Risk

Recent political scrutiny related to Federal Reserve operations has increased headline sensitivity around policy independence. While markets have limited precedent for pricing this type of risk, it adds an external variable alongside inflation and growth data. For now, price action—not commentary—remains the signal.

Delta Air Lines Earnings

Delta reports Q4 results this morning.

• Consensus EPS: $1.53

• Primary focus: FY2026 guidance

• Street expectations: ~$7.28

Airline demand data has remained firm following last year’s disruptions, supporting relative strength across the group. Delta shares have materially outperformed over the past quarter, raising the bar for guidance-related follow-through.

Novo Nordisk: GLP-1 Update

Novo Nordisk announced the U.S. launch of an FDA-approved GLP-1 weight-loss pill.

• Oral delivery addresses adoption friction associated with injectables.

• Management reiterated opposition to compounded alternatives, reinforcing its competitive positioning.

The broader GLP-1 theme remains structurally relevant, though near-term reactions continue to be headline-driven.

Market Analysis

After an early dip, buyers defended recent breakout levels across major indices. Volume remained subdued, consistent with event risk rather than a change in trend character.

Technology participation improved but remains selective, concentrated in semiconductor equipment, materials, and storage-related names. Broad large-cap leadership is still limited.

The primary uptrend remains intact. Consolidation above prior breakout areas would strengthen the case for incremental exposure. Preparation remains rooted in if–then scenarios rather than reaction.

Economic Reports

Tuesday

• ADP Employment Change

• CPI (MoM, YoY) – Dec

• New Home Sales – Oct

• 30-Year Bond Auction

Wednesday

• PPI (MoM) – Nov

• Retail Sales (MoM) – Nov

• Existing Home Sales – Dec

• Crude Oil Inventories

• Beige Book

• FOMC Speakers: Kashkari, Williams

Earnings Highlights

Before Market Open:

JPMorgan Chase & Co., Bank of New York Mellon, Delta Air Lines

After Market Close:

None scheduled

JPMorgan Chase & Co.

JPMorgan reports Q4 results with EPS expectations in the high-$4 range on approximately $45B in revenue. Focus remains on expense discipline following prior commentary around a higher 2026 cost base.

• Markets and investment banking activity improved in 2025.

• Execution and expense control remain the key variables under review, not revenue demand.

Sector Rotation

• Basic Materials: Gold-related names remain extended after news-driven momentum. Risk-reward favors patience.

• Health Care: Leadership remains intact with multiple names showing constructive structure.

  • Watchlist: PACS, BTSG, MRK, BMY, NVS, ILMN

• Industrials: Strength persists into early 2026, with continued focus on aerospace and defense.

  • Watchlist: LUNR, RKLB, ATI, BA, FDX, UAL

Travel-related equities continue to show constructive trend alignment.

Industry Groups

Relative Strength

• Travel Services: ABNB, TCOM, RCL, EXPE

• Drug Manufacturers: LLY, MRK, NVS, BMY

• Aerospace & Defense: GE, RTX, HWM, BA, RKLB

• Gold: NEM, WPM, AU, PAAS

Relative Weakness

• Software Infrastructure

• Software Applications

• Oil & Gas E&P

Closing Framing

Today’s CPI print anchors rate expectations, while elevated policy headlines add a nontraditional variable. Inflation outcomes matter. Headlines matter. Market structure and discipline remain the priority.

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