Stock market update: Dow, S&P 500, and Nasdaq futures hold steady following Fed developments as CPI inflation report approaches

US Stock Futures Hold Steady Ahead of Key Economic Updates

On Monday night, futures for US stocks remained relatively flat as investors prepared for a significant inflation report and the kickoff of earnings season for major financial institutions.

Futures tied to the Dow Jones Industrial Average edged up by 0.2%, while S&P 500 and Nasdaq 100 futures dipped by 0.1% each.

Investors Await December Inflation Data

Market participants are largely adopting a cautious stance ahead of Tuesday’s release of the December Consumer Price Index. This report is anticipated to provide a clearer view of inflation trends following last year’s prolonged government shutdown, which disrupted data collection. According to a Bloomberg survey, analysts expect inflation to have remained unchanged in December.

Labor Market and Rate Cut Expectations

The upcoming inflation figures are especially significant after December’s employment report signaled a slowdown in job growth. Futures markets now anticipate two quarter-point interest rate reductions in 2026, with the first likely to occur in June, based on projections from the CME Group’s FedWatch tool.

Stocks Reach New Highs Despite Political Headlines

During Monday’s trading session, the S&P 500 and Dow Jones Industrial Average both achieved record highs. Investors appeared largely unfazed by news of a Justice Department criminal investigation involving Federal Reserve Chair Jerome Powell.

Powell, whose term concludes in May, described the investigation as political pressure from President Trump, who has repeatedly advocated for deeper rate cuts. However, markets have largely dismissed these calls, noting that the Federal Reserve already implemented three rate reductions in late 2025 to bolster economic growth.

Bank Stocks React to Policy Proposals

Financial stocks came under some strain after Trump suggested a temporary 10% cap on credit card interest rates. In addition, the president announced Monday evening that countries continuing trade with Iran would be subject to a 25% US tariff, introducing further geopolitical uncertainty for investors.

Focus Shifts to Major Bank Earnings

Attention is now turning to corporate earnings, with JPMorgan Chase scheduled to release its fourth-quarter results before markets open on Tuesday. This report marks the beginning of a busy period for large Wall Street banks, as Bank of America, Citigroup, and Morgan Stanley are all set to report later in the week.