US STOCKS-Wall St set to open higher after inflation data, strong bank earnings

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By Johann M Cherian and Sukriti Gupta

Jan 15 (Reuters) - Wall Street's main indexes were set to open higher on Wednesday, as investors were relieved by data that showed core inflation rose less than expected in December, and cheered a strong batch of quarterly results from the country's biggest banks.

At 8:54 a.m. ET, Dow E-minis 1YMcv1 were up 673 points, or 1.57%, S&P 500 E-minis EScv1 were up 89 points, or 1.50% and Nasdaq 100 E-minis NQcv1 were up 356 points, or 1.70%.

Futures tracking the domestically focused small-cap Russell 2000 index RTYcv1 jumped nearly 3%.

A Labor Department report showed the consumer price index rose 2.9% in December, in line with expectations by economists polled by Reuters. Still, markets were focused on core CPI figures that advanced 3.2%, lower than estimates of a 3.3% rise.

Traders now see the central bank delivering a total of 38.4 basis points worth of rate cuts this year, according to data compiled by LSEG, compared with 31.3 bps before the inflation data.

The yield on the benchmark Treasury note US10YT=RR dipped and was last at 4.7%.

"It was a relief to see core inflation come in slightly lower than last month," said Brian Jacobsen, chief economist at Annex Wealth Management.

"The Fed is going through a long arduous process of rebuilding its credibility, so it will likely spend most of 2025 overreacting to upside surprises to inflation and underreacting to downside surprises with its messaging."

Focus was also on big banks' earnings.

JPMorgan Chase & Co JPM.N rose 3.8% in premarket trading after the lending giant posted a record annual profit in the fourth quarter, while Wells Fargo WFC.N added 5% after its fourth-quarter profit beat Street expectations as a rebound in dealmaking activity bolstered its investment banking business.

Goldman Sachs GS.N gained 3.8% after posting its best quarterly profit since the third quarter of 2021, while Citigroup C.N swung to a profit in the fourth quarter , sending its shares up 5.6%.

"It is very optimistic to look into 2025 with the new (Trump) administration, because there will be less regulatory activity and even with higher interest rates, the net interest margins of banks will probably improve," said Peter Andersen, founder of Andersen Capital Management.

The S&P 500 Banks Index .SPXBK has gained about 3% in January, outperforming Wall Street's main indexes, which have logged declines so far this month.

In 2024, the banking index logged its biggest annual jump since 2019 on expectations that U.S. President-elect Donald Trump's policies such as tax cuts and loose regulations could boost the financial sector.

Following a more than two-year bull rally, the S&P 500 .SPX is trading at valuations well above its historical long-term average and investors await earnings to justify further gains for equities.

The central bank is slated to unveil its beige book on economic activity at 2:00 p.m. ET, which is expected to throw further light on the economy's health.

Remarks from New York Fed President John Williams and Chicago Fed President Austan Goolsbee, both Federal Open Market Committee voting members, will also be parsed later in the day.

Among stocks, BlackRock BLK.N rose 5% after its assets hit a record high of $11.6 trillion in the fourth quarter.

(Reporting by Johann M Cherian, Medha Singh and Sukriti Gupta in Bengaluru; Editing by Pooja Desai)

((johann.mcherian@thomsonreuters.com;))