Dow Jones and S&P500: US Stocks Rise as Bank Earnings Offset Inflation Worries

Banking Sector Powers Market Rally Despite Inflation Concerns

Stock futures climbed Wednesday morning as major banks delivered strong second-quarter earnings, offsetting lingering inflation worries from recent tariff announcements. The financial sector’s outperformance signals renewed confidence in credit conditions and trading revenues heading into the back half of 2025.

Dow futures advanced 164 points to 44,411 (+0.37%), while S&P 500 futures gained 13 points to 6,397 (+0.21%). Nasdaq futures added 14.75 points to 23,071 (+0.06%), with the modest tech performance reflecting semiconductor sector concerns.

Can Bank of America and Goldman Sachs Sustain Trading Momentum?

Bank of America shares surged 1.5% after reporting earnings of 89 cents per share, beating consensus estimates of 86 cents. However, revenue of $26.61 billion fell short of the $26.72 billion Wall Street target, raising questions about net interest margin compression.

Goldman Sachs jumped 1.5% on stellar trading results, earning $10.91 per share versus expectations of $9.53. Revenue hit $14.58 billion, well above the $13.47 billion forecast, driven by robust equities trading performance. Morgan Stanley beat estimates but dipped 0.3% as investors took profits.

The banking rally builds on Tuesday’s strong results from JPMorgan Chase, Wells Fargo, and Citigroup, all of which topped earnings and revenue expectations.

Federal Reserve Faces Tariff-Driven Inflation Pressures

June’s Producer Price Index remained flat, defying economist expectations of a 0.2% increase. The benign wholesale inflation reading provided temporary relief after Tuesday’s concerning consumer price data.

However, President Trump’s escalating trade measures threaten to reignite price pressures. New 30% tariffs on Mexico and EU imports begin August 1, while a Jakarta trade deal includes 19% levies on Asian exports.

“Inflation has started a slow climb as signs of tariff-induced inflation are now evident within durable and nondurable imports,” warned RSM chief economist Joe Brusuelas. The key question remains whether cooling service and housing costs can offset rising goods prices.

Market Outlook: Selective Strength Amid Policy Uncertainty

The Federal Reserve’s patient approach appears justified as inflation data remains mixed. Banking strength suggests credit markets remain healthy, while semiconductor weakness from ASML’s 2026 growth warning highlights sector-specific headwinds.

Crypto-related stocks bounced on potential stablecoin legislation, with BitMine surging 20% and MicroStrategy gaining 1.5%. Johnson & Johnson’s 2% rise after beating estimates and raising guidance demonstrates defensive sector resilience.

Traders should monitor upcoming Fed communications and tariff implementation timelines, as policy clarity will likely determine whether the current banking-led rally can broaden across sectors.

More Information in our Economic Calendar.