US Q4 Earnings Season Set to Begin: Can US December CPI Data Bolster Rate Cut Case? [Weekly Preview]

TradingKey - U.S. stocks kicked off 2026 with a rally as the market bets on economic growth and remains optimistic that the Federal Reserve will further cut interest rates this year. The fourth-quarter U.S. earnings season officially begins this week. According to LSEG data, analysts expect S&P 500 companies to see overall earnings growth of approximately 13% in 2025, with growth projected to further accelerate to over 15% in 2026. JPMorgan Chase, the largest U.S. bank, is scheduled to report earnings this Tuesday, while other financial giants including Citigroup, Bank of America, and Goldman Sachs will follow with their results. December U.S. CPI data will also be released this Tuesday; a rebound in the figures could pressure expectations for Fed rate cuts.

Major Events Preview

U.S. Q4 Earnings Season Set to Begin: Can the Three Major Indices Maintain Their Strength?

The U.S. Q4 earnings season kicks off this week, with Wall Street majors like JPMorgan Chase (JPM.US), Citigroup (C.US), Bank of America (BAC.US), Wells Fargo (WFC.US), and Morgan Stanley (MS.US) leading the way next week. Analysts expect fourth-quarter earnings for the financial sector to grow by approximately 7% year-over-year.

Furthermore, Delta Air Lines (DAL-US) saw its stock price hit an all-time high, driven by an 18% drop in oil prices in 2025 and a recovery in business travel demand. TSMC (2330-TW) (TSM-US) is also in the spotlight, with its earnings report due this Thursday (15th) in Taiwan.

Major Release of U.S. December CPI: Will It Provide More Signals for Fed Rate Cuts?

The U.S. December CPI, due on Tuesday, is also a focal point for the market. Expectations are for the annual CPI growth rate to remain at 2.7%, while core CPI is expected to edge up to 2.7%. Analyst Eren Sengezer noted that while the December CPI is unlikely to significantly impact the Fed's January decision, a substantial deviation from expectations—particularly in the monthly core CPI—could trigger market reactions.

Inflation data will primarily influence the Federal Reserve's stance on rate cuts, and several Fed officials are scheduled to speak publicly this week. Officials are currently divided on the future policy path: some worry about sticky inflation, while others are more focused on the slowing labor market. Additionally, Trump's potential announcement of the next Fed Chair nominee and the Supreme Court's ruling on IEEPA tariffs could create ripples in financial markets.

Fed to Release "Beige Book" on Economic Conditions

This Wednesday, the Federal Reserve will release its latest Beige Book survey on regional economic conditions. The November Beige Book indicated that government shutdowns and AI adoption led to labor market softness, while rising tariffs and healthcare costs pushed up corporate expenses, potentially heightening inflation concerns. The K-shaped consumer divide has intensified, with high-income consumer spending remaining resilient, while low-to-middle-income households are "tightening their belts."

Investors will look for further clues as a series of Fed officials deliver speeches, including permanent FOMC voter and New York Fed President Williams, 2027 FOMC voter and Atlanta Fed President Bostic, 2028 FOMC voter and St. Louis Fed President Musalem, and 2027 FOMC voter and Richmond Fed President Barkin, among others.

Key Economic Data

Tuesday: U.S. December Core CPI (YoY, NSA)

Wednesday: U.S. November Retail Sales (MoM)

U.S. Initial Jobless Claims for the week ending Jan 10

Selected Events This Week

Monday: U.S. President Donald Trump delivers a speech

Tuesday: Permanent FOMC voter and New York Fed President Williams speaks

Wednesday: U.S. Supreme Court rules on the legality of Trump's tariffs

Wednesday: Federal Reserve releases the Beige Book on economic conditions

Major Earnings This Week

Monday: JPMorgan Chase (JPM.N), Delta Air Lines (DAL.N), BNY Mellon (BK.N)

Tuesday: Bank of America (BAC.N), Citigroup (C.N), Wells Fargo (WFC.N)

Wednesday: Morgan Stanley (MS.N), Goldman Sachs (GS.N), BlackRock (BLK.N)