US stocks hover near the flatline as inflation showed signs of cooling

• Core CPI increased 0.2% in December (vs. 0.3% expected) and 2.6% year-over-year (vs. 2.8% expected), suggesting gradual easing of inflation pressures though still above the Fed's 2% target
• Markets are pricing in two quarter-point Fed rate cuts in 2026 beginning in June, with policymakers expected to hold rates steady at the January meeting pending more evidence of sustained inflation decline
• Fourth-quarter earnings season began with JPMorgan beating expectations while Delta Air Lines fell over 1% on mixed results, with major banks including Bank of America, Citigroup, and Morgan Stanley reporting later this week

Market Summary: US Stocks Flat as Inflation Cools

Key Market Movements

US equities showed minimal movement on Tuesday, January 13, 2026, with the S&P 500 edging up 0.1% and the Dow Jones Industrial Average declining 35 points. The Nasdaq Composite hovered near the flatline. This followed record-setting sessions on Monday, when both the S&P 500 and Dow closed at all-time highs, along with the Russell 2000 small-cap index.

Inflation Data

December's consumer price index provided modest relief to markets. Core CPI (excluding food and energy) rose 0.2% monthly and 2.6% year-over-year, below economist expectations of 0.3% and 2.8% respectively. Headline CPI increased 0.3% monthly, bringing annual inflation to 2.7%, matching forecasts. Notable price movements included food prices jumping 0.7% monthly, while egg prices fell 8.2% in December and nearly 21% year-over-year.

Federal Reserve Outlook

The softer-than-expected core inflation reading reinforced hopes of easing price pressures, though inflation remains above the Fed's 2% target. Combined with last week's stable jobs report, markets expect the Federal Reserve to hold rates steady at its January meeting. Fed funds futures currently price in two quarter-point rate cuts for 2026, beginning in June.

Earnings Season

Fourth-quarter earnings season commenced with mixed results. JPMorgan Chase reported strong earnings but saw its stock struggle for direction. Delta Air Lines fell over 1% after posting mixed results, highlighting uneven demand and cost pressures. Major financial institutions including Bank of America, Citigroup, and Morgan Stanley are scheduled to report this week, providing further insight into consumer spending and credit conditions.