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(Reuters) – Futures tracking Wall Street’s main indexes were muted on Wednesday as investors awaited a slew of big bank earnings and a crucial inflation report that could influence market direction, especially for U.S. stocks currently sitting on ripe valuations.

At 04:27 a.m. ET, Dow E-minis were up 35 points, or 0.08%, S&P 500 E-minis were up 3 points, or 0.05% and Nasdaq 100 E-minis were up 23.75 points, or 0.11%.

JPMorgan Chase & Co, Wells Fargo, Citigroup and Goldman Sachs edged up in light premarket trading, ahead of their quarterly earnings reports, due before markets open. Analysts expect the lenders to report stronger earnings, fueled by robust dealmaking and trading.

The S&P 500 Banks Index 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 incoming U.S. President 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 is trading at valuations well above its historical long-term average and a disappointing earnings season could put further gains for equities in jeopardy.

Also on the radar is the consumer price index, due at 8:30 a.m. ET, and economists polled by Reuters expect the figure to rise 2.9% in December, from the previous month’s 2.7% advance. Excluding volatile items such as food and energy, the index is expected to increase 3.3%.

“Vital is an understatement to characterise the relevance of today’s CPI release in the U.S., and after Friday’s stellar employment report, the bond market in particular is on tenterhooks for what could be another tumultuous session and days ahead if the data comes in hot,” Societe Generale strategist Kenneth Broux said in a note.

Signs of strong economic activity and expectations that Trump’s policies on immigration and tariffs could further stoke price pressures have caused markets to pare back bets on the U.S. Federal Reserve’s pace of monetary policy easing this year.

Traders see the central bank delivering a total of 31.2 basis points worth of rate cuts this year, according to data compiled by LSEG. The central bank is expected to unveil its beige book on economic activity at 2:00 p.m. ET, which is expected to throw further light on the health of the economy.

Adding to investor unease, yields on longer-dated Treasury bonds remained near their more than one-year highs. [US/]

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, Applied Digital lost 4.7% after the data center operator posted a loss for the second quarter.

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

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By Andrea Shalal

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Wednesday will defend the Biden administration’s response to the COVID pandemic, arguing that its stimulus spending and other policies led to robust growth and averted millions of job losses.

In her last major speech before leaving office on Tuesday, Yellen will argue that the Biden administration’s stimulus checks, monthly child tax credits and enhanced unemployment benefits reduced major downside risks, and that inflation – which spiked everywhere – fell earlier in the U.S. than in other rich countries.

While the U.S. economy had done “remarkably well” in the aftermath of the pandemic, it outperformed other advanced economies and did better than in past recessions, Yellen said in excerpts released by the Treasury Department. The pace of inflation cooled dramatically as supply disruptions eased.

The Biden administration and Democrats in Congress enacted the $1.9 trillion American Rescue Plan Act in March 2021, after more than $3 trillion in COVID spending approved during President-elect Donald Trump’s first administration in 2020.

The actions kept paychecks flowing for idled workers, paid rent and put thousands of dollars directly into Americans’ bank accounts, fueling sharp increases in consumer spending at a time when the economy was plagued by pandemic-driven shortages.

Yellen, who last week offered a rare concession that the stimulus spending may have contributed “a little bit” to inflation, argued on Wednesday that it substantially offset the income gaps faced by some 10 million people who lost their jobs or left the labor force by the end of 2020.

The spending averted “significant hardship” and supported demand, which allowed Americans to get back to work quickly, which in turn helped the U.S. avoid the erosion of skills and fallout of long-term unemployment, she said.

A policy aimed solely at preventing the post-pandemic surge in prices without looking at employment consequences would have resulted in far less or even contractionary spending, Yellen said.

Lower spending would likely have led to far lower output and employment, with potentially millions more people out of work, households without the income to meet their financial obligations, and lackluster consumer spending, she said.

Yellen said most researchers agreed a substantial increase in the unemployment rate would have been needed to keep inflation at the Federal Reserve’s 2% target, possibly as high as 10% to 14% throughout 2021 and 2022, with an additional 9 million to 15 million people out of work.

The U.S. unemployment rate has been below 4% for more than two years, an unparalleled streak not seen since the 1960s. The unemployment rate since 1948 has averaged 5.7%.

Yellen said the U.S. economy was doing well now, with solid growth, low inflation and a strong labor market, but more work was needed to address structural trends that make it difficult for many families to achieve a middle-class life.

The former Federal Reserve chair has championed what she calls “modern supply-side economics,” which rejects the idea that deregulation and tax cuts for the rich will fuel broader economic growth, and focuses instead on investments in infrastructure, the labor force and research and development.

(Reporting by Andrea Shalal; Editing by Leslie Adler)

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(Reuters) – Tesla plans to suspend part of the lines manufacturing its recently refreshed Model Y sport utility vehicles in Shanghai for around three weeks over Chinese New Year, Bloomberg News reported on Wednesday, citing people familiar with the matter.

Tesla did not immediately respond to Reuters’ request for comment.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shreya Biswas)

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By Kalea Hall and Nora Eckert

DETROIT (Reuters) – Chuck Browning, who has been a prominent leader in the United Auto Workers union and negotiated its deals with Ford Motor, is retiring, according to three sources familiar with the matter.

Browning announced his retirement on Tuesday at a meeting of local union leaders in Chattanooga, Tennessee. He is leading negotiations between the union and Volkswagen at a plant there, which last year became the first foreign-owned auto factory in the U.S. South to organize.

He is one of the most prominent officials behind UAW President Shawn Fain, and helped secure a record deal with Ford Motor during the labor group’s six-week strike in late 2023. Automakers General Motors and Stellantis followed suit, agreeing to 25% base wage increases and cost-of-living adjustments.

Browning is expected to retire after finalizing the Volkswagen contract, leaving his post ahead of the next union presidential election, which is slated for 2026.

The UAW and Browning didn’t immediately respond to a request for comment.

Browning has been on the union’s international staff since 2000. He was elected by the  UAW’s International Executive Board  as vice president in 2021, and was sworn in for a second term in 2023 through the union’s first direct election, in which Fain was selected as president.

(Reporting by Kalea Hall and Nora Eckert in Detroit; Editing by Nia Williams)

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NEW YORK (AP) — A U.S. watchdog is suing Capital One for allegedly misleading consumers about its offerings for high-interest savings accounts — and “cheating” customers out of more than $2 billion in lost interest payments as a result.

In a complaint filed Tuesday, the Consumer Financial Protection Bureau took aim at Capital One’s promises and handling of its “360 Savings” accounts. Despite promoting 360 Savings as an account that provides one of nation’s highest interest rates, the CFPB alleges that Capital One froze its rate at a low level for at least several years, even as rates rose nationally.

At the same time, the CFPB adds, the bank created “360 Performance Savings,” which saw a much higher rate grow. But the agency says that Capital One did not notify 360 Savings accountholders about this new offering and “instead worked to keep them in the dark” — alleging that the company marketed the products similarly to obscure their distinction and forbade employees “from proactively telling” those with 360 Savings accounts about 360 Performance Savings.

These actions mean Capital One “illegally avoided paying billions in interest to millions of consumers,” the CFPB wrote in its Tuesday complaint. The agency says it’s seeking to impose civil penalties and provide financial relief to those impacted.

“Banks should not be baiting people with promises they can’t live up to,” CFPB Director Rohit Chopra said in a prepared statement.

In response, Capital One said that it strongly disagreed with the CFPB’s allegations and plans to “vigorously defend” itself in court. The banking giant added that it was “deeply disappointed to see the CFPB continue its recent pattern of filing eleventh-hour lawsuits ahead of a change in administration.”

Capital One also maintained that all of its 360 banking products “offer great rates” — and have “always been available in just minutes to all new and existing customers without any of the usual industry restrictions.”

According to disclosures on the Capital One’s website, 360 Savings accounts currently carry an interest rate of just under 0.50%. 360 Performance Savings accounts have an interest rate of about 3.74%.

That means the rate for 360 Performance Savings is nearly 7.5 times higher than that of 360 Savings today. But the CFPB says they’ve been farther apart in the past. In July 2024, the agency notes in Tuesday’s complaint, the 360 Performance Savings rate was more than 14 times that of 360 Savings.

The CFPB alleges that Capital One kept the rate for its 360 Savings accounts at 0.30% between December 2020 through at least August 2024. The rate for 360 Performance Savings, by contrast, climbed from 0.40% in April 2022 to as high as 4.35% at the start of 2024 — falling slightly to 4.25% by August, the agency noted Tuesday.

The CFPB’s complaint against Capital One comes less than one week before the Jan. 20 inauguration of President-elect Donald Trump. Despite the change in administration, some say this litigation could still survive. Analyst commentary from TD Cowen on Tuesday noted that the CFPB still brought enforcement actions under Trump’s first term, for example, although such litigation may also be easier to settle under the incoming administration.

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By Nupur Anand

MIAMI (Reuters) – Wall Street bankers are already upbeat about a revival in mergers and acquisitions this year that will buoy broader investment banking activity.

It may take some time for deals to materialize, but buyouts including bank deals could gain momentum in the second half of 2025.

Here are quotes from the Frontiers of Digital Finance conference in Miami:

AVINASH MEHROTRA, CO-HEAD OF M&A AMERICAS, GOLDMAN SACHS:

You have four banks that have over a trillion dollars in assets. I think there’s an expectation that the regulators would welcome at least another one or two in that stratosphere, so that we’ve got an environment where we have more competition.

But I think we are going to see the most activity in the regional bank space, which would include banks that are under $100 billion in assets.

On the timing, it is going to start a bit slower, but will pick up pace.

DAVID MACGOWN, MANAGING DIRECTOR AT BARCLAYS:

M&A activity has picked up markedly post-elections. There are a host of reasons driving the pent-up demand from what has been a couple of years of market turmoil across financial institutions, less sponsors and some skewed ratios.

Now there’s pent-up demand for deals to get done. There are more deals in the market now, more assets for sale, but threading the needle and trying to get things done is challenging.

JEFFREY LEVINE, GLOBAL CO-HEAD OF FINANCIAL SERVICES AT HOULIHAN LOKEY:

More capital has been raised in the last three years than in the history of private equity, but it hasn’t been deployed.

There’s definitely been a mismatch between buying and selling and a lot has to do with interest rate environment and credit conditions, but that is shifting now.

We are seeing more activity in the markets. We have more deals already coming into the market in 2025 than we had in the last two years.

(Reporting by Nupur Anand in Miami; Editing by Lananh Nguyen)

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Southwest Airlines said Tuesday that it would put the filling of some jobs and summer internships on hold this year as the company looks to lower costs.

The airline said it would honor internship offers already made but pause all “non-contract internal and external hiring.” Southwest said it would evaluate its staffing needs on an ongoing basis to determine when it made the most sense to restart hiring.

As part of the moves to limit “discretionary costs,” the company also does not plan to host the annual rallies where Southwest employees gather to celebrate past accomplishments and hear about future initiatives from corporate executives.

Southwest announced in September that it would revamp its board and that its chairman would retire in 2025, in a partial concession to hedge fund Elliott Investment Management, which has been pushing for changes at the airline.

Elliott, the fund led by billionaire investor Paul Singer, has built a minority stake in Southwest and advocated for changes it argued would improve the company’s financial performance and stock price.

The two sides reached a settlement in October. At the time, Southwest said that Chairman Gary Kelly and six board members would depart on Nov. 1 and be replaced by five Elliott-backed candidates and a former Chevron executive.

Southwest was a profit machine for its first 50 years — it never suffered a full-year loss until the pandemic crushed air travel in 2020. Since then, the company has been more profitable than American Airlines but far less so than Delta Air Lines and United Airlines.

Southwest was a scrappy upstart for much of its history. It operated out of less-crowded secondary airports where it could turn around arriving planes and take off quickly with a new set of passengers. It appealed to budget-conscious travelers by offering low fares and no fees for changing a reservation or checking up to two bags.

But Southwest now flies to many of the same big airports as its rivals. With the rise of “ultra-low-cost carriers,” it often gets undercut on price.

As part of its efforts to turnaround the business, Southwest has announced plans to increase revenue by converting nearly one-third of its seats to premium ones with extra legroom. It will also begin assigning seats — ending the longtime practice of letting passengers pick their own seats after boarding the plane. And it is pursuing partnerships with international airlines, starting with Icelandair, to offer destinations beyond North America and Central America.

In November the Dallas-based airline offered buyouts and extended leaves of absence to airport workers to avoid what it called “overstaffing in certain locations,” which it blamed on a shortage of new planes from Boeing.

Shares of Southwest rose slightly in morning trading.

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NEW YORK (Reuters) -The S&P 500 edged higher while the Nasdaq dipped after a volatile session on Tuesday as investors gauged inflation data and braced for quarterly earnings reports to justify stock valuations and the strength of the U.S. economy.

Stocks oscillated between gains and losses throughout the day. Equities received an initial lift from a Labor Department report that showed the producer price index rose less than expected in December, although the report failed to materially affect expectations about the Federal Reserve’s likely path of monetary policy this year.

Investors awaited Wednesday’s consumer price index reading, which will further shape expectations for inflation and the Fed.

“There is an inherent level of uncertainty out there about where rates and the Fed is headed,” said Chris Fasciano, chief market strategist at Commonwealth Financial Network.

“Now we’ll see what tomorrow morning brings,” he said, referring to the CPI report.

The Dow Jones Industrial Average rose 221.16 points, or 0.52%, to 42,518.28, the S&P 500 gained 6.69 points, or 0.11%, to 5,842.91 and the Nasdaq Composite lost 43.71 points, or 0.23%, to 19,044.39.

The market is pricing in about 29 basis points in rate cuts from the Fed by the end of 2025, according to LSEG data, with expectations for a cut of at least 25 bps not rising above 50% until the June meeting.

Adding to investor caution, U.S. Treasury yields remained at elevated levels, with the yield on the benchmark 10-year Treasury note at 4.784%, holding near a 14-month high reached on Monday.

Quarterly earnings get under way on Wednesday with results from big banks, which are expected to post stronger profits, fueled by robust dealmaking and trading. The S&P 500 bank index advanced.

Goldman Sachs shares gained 1.52% ahead of its earnings results scheduled for Wednesday and helped keep the Dow in positive territory.

The benchmark S&P 500 is trading at valuations well above its historical long-term average and a disappointing earnings season could put further gains for equities in jeopardy.

Healthcare was among the worst-performing of the 11 major S&P sectors, down 0.94% as Eli Lilly stumbled 6.59% after it forecast fourth-quarter sales of weight-loss drug Zepbound below estimates.

Kansas City Fed president Jeff Schmid said the impact of Trump’s policies was an “active conversation” at the central bank and that it would respond if either its inflation or employment goals are pushed off course.

After rallying following the U.S. election, stocks have struggled recently, with the S&P 500 falling in four of the previous five weeks as a resilient economy, nagging inflation and comments from Fed policymakers have fueled worries about the central bank being less aggressive in cutting interest rates than previously anticipated.

Concerns about potential tariffs from the Trump administration that would further stoke inflation have also lingered.

Boeing shed 2.08% after the planemaker’s annual deliveries dropped in 2024 to their lowest level since the pandemic.

Advancing issues outnumbered decliners by a 2.81-to-1 ratio on the NYSE and by a 1.39-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and six new lows, while the Nasdaq Composite recorded 36 new highs and 132 new lows.

Volume on U.S. exchanges was 13.58 billion shares, compared with the 15.72-billion average over the last 20 trading days.

(Reporting by Chuck Mikolajczak, additional reporting by Sinéad Carew in New York, Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by Rod Nickel)

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PARIS (AP) — France’s new prime minister, François Bayrou, is facing his first major test at parliament on Tuesday as his government has no majority amid unprecedented political instability.

Bayrou will address lawmakers through a general policy speech meant to outline his top priorities, including key budget decisions, one month after he was appointed by President Emmanuel Macron.

Bayrou urgently needs to pass a budget bill for 2025. Following the collapse of the previous government, an emergency law has been approved to enable the state to levy taxes from Jan. 1, pay basic expenses and avoid a shutdown.

But only a proper budget would help reduce France’s deficit and allow key expenses such as defense measures needed amid the war in Ukraine or aid promised to angry farmers.

Financial markets, ratings agencies and the European Commission are pushing France to comply with EU rules limiting debt and keep France’s borrowing costs from spiraling. That would threaten the prosperity of eurozone countries.

France’s deficit is estimated to reach 6% of its gross domestic product in 2024. Finance Minister Éric Lombard said last week the government is “aiming for a deficit of between 5 and 5.5%” this year.

When he took office, Bayrou said that “no one knows the difficulty of the situation better” than he does, comparing the challenges faced to an “Himalaya.”

Bayrou’s Cabinet relies on a fragile deal between Macron’s centrist allies and conservatives of The Republicans party who even together have no parliamentary majority.

The previous government was in place for only three months before being brought down by opposition lawmakers from both the left and the far right amid a budget dispute.

To avoid a repetition of that scenario, Bayrou seeks to secure a nonaggression pact with the Socialists so that they wouldn’t support any future move to topple the new government.

The Socialists said they are open to talks on the condition that they would include negotiations on Macron’s unpopular pension reform that passed two years ago.

However, the possibility of another no-confidence vote is still looming.

The hard-left France Unbowed party refused to enter into talks with the government and already announced it would file a no-confidence motion.

A vote later this week would have little chance of succeeding as the far right appears unwilling to support such move in the immediate term.

Yet the question could be raised again during the future budget debate at parliament, with more uncertainty on the result.

Macron’s plan to raise the retirement age from 62 to 64 unleashed months of mass protests from January to June 2023 that damaged his leadership. The legislation, which has gradually started being implemented, also requires people to work 43 years to receive a full pension.

The Socialists are now urging Bayrou to announce a “suspension” of the reform in order to provide time to renegotiate it, with the aim of backtracking on the age of 64 and introducing specific measures for those who have long careers and certain professions considered to be hard work.

A suspension, if it was to be announced, would prompt anger on the other side of the political spectrum, possibly weakening Bayrou’s government even further.

The conservative Senate president, Gérard Larcher, warned that the pension measures shouldn’t be suspended or rescinded.

“If we were to repeal the pension reform, the cost would be 3.4 billion euros ($3,47 billion) in 2025 and almost 16 billion ($16.3 billion) in 2032,” he said.

Far-right leader Marine Le Pen — Macron’s fiercest rival — was instrumental in ousting the previous government.

Bayrou consulted her when forming the new government, and Le Pen remains a powerful force. Her National Rally party has the largest single group in the National Assembly, France’s powerful lower house of parliament.

In recent days, Bayrou’s government sought to sideline Le Pen by negotiating instead with the Socialists, the Greens and the Communists on budget issues.

The president of the National Rally, Jordan Bardella, criticized those talks and warned Monday that his party would oppose any budget that would raise the cost of medication, provide more health care for migrants staying illegally in the country and impose new taxes on businesses. Such measures would justify a no-confidence vote, he said.

But Le Pen faces her own headaches in the months to come — a March court ruling over alleged illegal party financing could see her barred from running for office.

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(Reuters) – Australian flag carrier Qantas has had to delay several flights on the Sydney-Johannesburg route over the past few weeks on the U.S. government’s advice regarding the re-entry of SpaceX rockets over a part of the southern Indian Ocean, the airline said on Tuesday.

The delays of up to six hours were caused due to last-minute changes in coordinates for the location and timing of re-entry of rockets from Elon Musk’s space technology firm.

“While we try to make any changes to our schedule in advance, the timing of recent launches have moved around at late notice which has meant we’ve had to delay some flights just prior to departure,” said Ben Holland, the head of Qantas’s operations centre.

“We’re in contact with SpaceX to see if they can refine the areas and time windows for the rocket re-entries to minimise future disruption,” Holland added.

SpaceX did not immediately respond to a request for comment.

(Reporting by Aaditya Govind Rao in Bengaluru; Editing by Mrigank Dhaniwala)

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