Major Banks Data Expected to Shape the Inflation Course

S&P 500 futures saw a modest increase of 0.1%, while Nasdaq 100 futures experienced a more significant advance of 0.4%. Market participants are keenly focused on the upcoming inflation data, which is expected to be a major driver for market trends. This data will be crucial in assessing the effectiveness of the Federal Reserve's monetary tightening policies in controlling inflation. The outcome will also be pivotal in aligning market expectations, which currently anticipate six rate cuts in 2024, against the Federal Reserve's projection of three cuts for the year. The December Consumer Price Index (CPI) reading might indicate that traders are prematurely expecting rate cuts from the Federal Reserve.

Investors are also closely monitoring the beginning of the fourth-quarter earnings season. Prominent banks such as Bank of America, Wells Fargo, and JPMorgan Chase are scheduled to report their results this Friday. Meanwhile, the Nasdaq showed resilience yesterday, recovering most of its recent losses. If the upcoming data is lower than expected, Nasdaq could potentially aim for a new record, targeting the 17425 mark. Conversely, if the data exceeds expectations, the Nasdaq might face significant sell-offs, with the 16200 area, which also represents the median line, likely serving as the next support level.