How Blowout Bank Earnings And A Promising Inflation Report Gave The Market A Much-needed Boost

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Hello there! A product going viral can be a double-edged sword for retailers. Just ask Walmart. The big-box store's e-commerce marketplace got a boost from an imitation Hermès' Birkin bag making the rounds, but dupes also cause headaches for brand relationships.

In today's big story, US banks' impressive earnings and a hopeful inflation report have stocks back on the rise.

What's on deck

Markets: Anthony Scaramucci offers some economic predictions for Trump's second term.

Tech: The VC world is starting to heal as Insight Partners raises a massive new fund.

Business: Billionaires are booked and busy next week thanks to a scheduling conflict between the inauguration and Davos.

But first, we're so back.

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The big story

Don't call it a comeback

Drew Angerer/Getty Images

It's alive!

After a slow start to the year, the stock market finally showed signs of life thanks to blowout bank earnings and better-than-expected inflation data. The S&P 500 finished Wednesday up 1.83%, while the Dow (1.65%) and tech-heavy Nasdaq composite (2.45%) posted strong days.

Let's start with Wall Street. Big US banks represent the unofficial kickoff to earnings season, and they didn't disappoint. JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo all beat analysts expectations.

JPMorgan saw a 50% year-over-year increase in profits for the fourth quarter while Goldman's profits jumped an incredible 105%. The banking boom was largely driven by classic Wall Street businesses like corporate dealmaking, capital raising, and trading.

December's inflation report also put extra wind in the market's sails.

At first glance — inflation rose for the third straight month — the reading might not seem great. But a closer look showed the consumer price index's year-over-year increase matched consensus expectations, which is good.

What's even better, though, is core inflation, which strips out volatile food and energy prices, was slightly below expectations. It also came in lower than November's number.

Before you get ahead of yourself, don't expect a slew of rate cuts. Instead, the data calmed investors' nerves by slowing the troubling rise of the 10-year Treasury yield, which dropped 0.14%.

"Core Inflation isn't accelerating and that's the story. The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion," said Jamie Cox, Managing Partner for Harris Financial Group.

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So what's next for Wall Street?

In the short term, bankers might finally enjoy some healthy bonuses after a few slim years. Workers are starting to find out about their year-end comp.

Bigger picture, it's more momentum for the industry's job market. After a lull in activity, firms are bolstering their ranks across the board for what appears to be an active 2025.

The private markets are one area that'll remain in the spotlight. The sector, which includes less-liquid investments like private equity and private credit that come with higher fees, is of particular interest to BlackRock. The $11.6 trillion asset manager sees it as the key to its next stage of evolution, according to CEO Larry Fink.

One evolution Fink didn't discuss was who will take over when he's gone. That's despite the recent departure of executive Mark Wiedman, which reignited questions about what life after Larry will look like at BlackRock.

JPMorgan CEO Jamie Dimon was a little bit more forthcoming with his own retirement plans … sort of. When asked by an analyst who his successor was, Dimon said there are a number of great candidates, but a decision hasn't been made.

And even if the bank did have someone in mind, there's no guarantee things won't change, Dimon added.

News brief

Top headlines

• Jeff Bezos' Blue Origin launches New Glenn mega-rocket, entering the orbital big league.
• Biden warns of a 'tech industrial complex' and says America must lead the way on AI, not China, in farewell address.
• One of the world's biggest oil companies is cutting thousands of jobs.
• TSMC profits surge 57% as demand for AI chips remains high.
• The FDA has banned Red No. 3, a synthetic dye used in candy, cereals, and Tylenol.
• Democrats urge Trump nominees to keep the IRS's free direct-tax-filing tool, touting it as a DOGE-friendly program.
• California moves to stop predatory sales of fire-stricken homes.
• More than 400 Washington Post staffers send urgent plea to Jeff Bezos: 'We are deeply alarmed.'
• Trump pushing DOGE co-head Vivek Ramaswamy to fill JD Vance's Senate seat.

3 things in markets

Anthony Scaramucci, SkyBridge Capital; Jenny Chang-Rodriguez/BI

1. One of Trump's opps is feeling good about the economy. Despite being a longtime Trump critic, Anthony Scaramucci is pretty optimistic about the economy under the incoming 47th president. He sees Trump's pro-growth policies and potential crypto legislation as an economic boon — but he's still concerned about some of Trump's other promises.

2. Hindenburg Research is tapping out. Nate Anderson, founder of the short-selling firm, said he's disbanding it, once they've completed all outstanding projects. Hindenburg gained fame for its forensic financial research, often focusing on what it argued to be fraudulent or misleading corporate behavior. Anderson said he plans to share the firm's investigation tactics publicly.

3. Dividend stocks are so back. Large-cap stocks have dominated the market, but a change could be coming, according to Morningstar. As their valuations continue to climb, dividend stocks might become more palatable. Morningstar highlighted dividend stocks in four specific sectors savvy investors should pay attention to.

3 things in tech

Brendan Smilalowski/AFP via Getty, Tyler Le/BI

1. Mark Zuckerberg lost $60 billion in five years — and he's going to keep spending. Despite persistent predictions that the VR and AR headset market will boom, consumers just aren't interested. Meta lost big on the tech in the last few years, but that hasn't deterred Zuck, who keeps telling investors they should expect more losses in the future.

2. Exclusive: Insight Partners raises $12.5 billion for its newest set of funds. It's the largest sum raised by a venture capital firm in over two years, according to PitchBook data. Insight's $12.5 billion may be less than its initial funding goal, but it's still an impressive get as the industry looks to mount a comeback.

3. "TikTok refugees" flock to Chinese app RedNote. While some Americans are coping with a possible TikTok ban through memes, competitors like Texas-based app Clapper are seizing the moment. Other Americans are heading to the Chinese app Xiaohongshu, also known as RedNote. It might be worth learning how to use it — but some members of Congress are already taking aim.

3 things in business

Alyssa Powell/BI

1. WFH + Fridays = OOO. For some remote workers, the W in WFH Friday is a bit of a stretch. They're turning every weekend into a three-day weekend, and they don't feel particularly bad about it, either.

2. Home Depot cofounders were investigated by the FBI in the '70s and '80s, new public records show. The FBI was investigating Bernie Marcus and Arthur Blank over claims they used a slush fund in an attempt to bribe California Handy Dan employees to decertify their union, newly obtained records show. The investigation ended in 1983 when a prosecutor determined the case was too old and evidence was "insufficient."

3. Double-booked billionaires. January 20 is not only Trump's inauguration but also the first day of the World Economic Forum's high-profile conference in Davos, Switzerland. Conflicted guests will have to choose between missing potential face time with the new president or a day of brushing shoulders with the global elite. Jeff Bezos, Google CEO Sundar Pichai, and Uber CEO Dara Khosrowshahi won't be missing out on Trump's big day.

In other news

• Drake sues Universal Music Group, his own label, amid Kendrick Lamar diss track feud.
• Job ads are now laundry lists and applications are rejected by algorithms — it's no wonder everyone is frustrated.
• A lawyer says he dropped Meta as a client after what he called a 'descent into toxic masculinity' by Zuckerberg's company.
• If you want to land a job this year, get good with AI.

• Boeing's dismal 2024 deliveries show just how much of a challenge CEO Kelly Ortberg faces.

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  What's happening now

  UnitedHealth Group, Bank of America, and Morgan Stanley report earnings.

• Senate Finance Committee hearing on Trump's Treasury nominee Scott Bessent.
• South Korean Constitutional Court hearing on president Yoon

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.