Wall Street opened Wednesday watching two things at once: the government's Consumer Price Index report for September, and a fresh batch of third-quarter earnings from some of the country's largest banks. US stock futures drifted modestly higher in premarket trading, with the Dow and S&P 500 up around 0.1% and the Nasdaq hovering near flat, after stocks pulled back on Tuesday.
Bank of America, Morgan Stanley, and BlackRock were all scheduled to report results Wednesday, extending a bank earnings season that began with strong numbers from JPMorgan Chase earlier in the week. Bank earnings are traditionally one of the first signals each quarter of how consumers and corporate borrowers are holding up, since lending volumes, credit card spending, and loan losses all show up in the numbers before most other companies report.
The inflation report matters because the Federal Reserve, now led by Chair Kevin Warsh, is due to announce its next interest rate decision on October 28. The federal funds rate currently sits in a target range of 3.75% to 4.00%, and traders have been weighing the odds of further rate moves before year-end as policymakers balance a labor market that has cooled somewhat against inflation that has proven sticky. Markets had been pricing meaningfully higher odds of a move by the Fed's December meeting than for this month's decision.
Elsewhere in markets, South Korea's KOSPI index rose after a sharp five-day decline tied to a sell-off in chip stocks began to ease, while European markets traded in a mixed, mostly flat pattern. In Australia, the ASX 200 closed down 0.64% as major bank stocks weighed on the index.
The Fed's rate decision lands October 28, and officials enter a blackout period on October 17 during which they typically avoid public comments on policy, meaning markets will have limited fresh guidance from policymakers between now and then.
Why do bank earnings matter so much at the start of earnings season?
Banks' results on lending, spending, and credit losses offer an early read on the broader economy before most other companies report.
Who is the current Fed chair?
Kevin Warsh, who is leading the Federal Reserve into its October 28 rate decision.