Tue Jan 13 13:30:00 UTC 2026: ### Stocks Recover After Inflation Data, Powell Probe Concerns Linger

The Story:

U.S. stock futures rebounded on Tuesday, fueled by a benign inflation report that reinforced expectations of the Federal Reserve holding interest rates steady. The December Consumer Price Index (CPI) aligned with forecasts, showing a 2.7% annual headline rate. However, lingering concerns persist around a U.S. criminal probe into Fed Chair Jerome Powell, adding to market uncertainty. Meanwhile, JPMorgan Chase reported mixed Q4 earnings, missing earnings estimates due to a $2.2 billion hit from the Apple Card deal, initiating the earnings season.

Key Points:

  • The December CPI showed a 2.7% annual headline inflation rate and a 0.3% monthly rate, matching forecasts.
  • Traders anticipate the Fed to maintain steady rates in January and are pricing in potential rate cuts in June 2026.
  • A U.S. criminal probe into Fed Chair Jerome Powell continues to raise concerns about the Fed’s autonomy.
  • JPMorgan Chase reported Q4 earnings miss due to a $2.2 billion impact from the Apple Card deal.
  • President Trump threatened a 25% tariff on countries doing business with Iran, introducing further geopolitical risks.
  • L3Harris Technologies saw shares surge on news of a $1 billion U.S. government investment in its rocket motor business.
  • Delta Airlines’s stock fell despite reporting upbeat Q4 results, as its forecast fell below estimates.
  • Gold prices remained steady near record highs amidst concerns over Fed independence.

Critical Analysis:

The market’s reaction reflects a delicate balancing act. The positive inflation data provides short-term relief, affirming the likelihood of the Fed maintaining current rates. However, the ongoing investigation into Jerome Powell, coupled with geopolitical tensions stemming from President Trump’s trade threats, injects significant uncertainty. This suggests the market is susceptible to volatility, reacting sharply to both economic indicators and political developments. The fact that global central bankers are rallying to condemn the investigation on Powell suggests that markets are more concerned with geopolitical uncertainty than the actual data.

Key Takeaways:

  • The market is highly sensitive to both economic data and political/geopolitical developments.
  • The independence of the Federal Reserve is a key concern for investors, impacting market stability.
  • Earnings season is beginning with mixed results, indicating potential sector-specific impacts on market performance.
  • Geopolitical risks, such as trade tensions and investigations into key officials, can quickly overshadow positive economic news.

Impact Analysis:

The confluence of these events has the potential for both short and long-term impacts.

  • Short-Term: Increased market volatility due to uncertainty surrounding Fed policy and geopolitical risks. Sector-specific reactions based on earnings reports, as seen with L3Harris and Delta.
  • Long-Term: The integrity of the Federal Reserve and confidence in its independence will be heavily tested. A failure to protect the Fed’s autonomy could lead to long-term inflationary pressure and a devaluation of the dollar. The outcome of the investigation into Jerome Powell will have long lasting impacts on the confidence of the markets.

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