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Fundamentals, for the most part, drove price action on Tuesday as markets seemed to reject modern politics as a foundation for monetary policy. All three main U.S. equity indexes opened slightly higher, but none of them were up at the end of a trading session that was positive for other reasons.
The economic calendar brought some comfort this morning: The Bureau of Labor Statistics (BLS) said before the opening bell that the Consumer Price Index (CPI) was up 0.3% compared to November, while core CPI increased by 0.2%. Year-over-year CPI was 2.7%.
According to the Schwab Center for Financial Research, “CPI was uneventful in December, with headline coming in as expected and core a touch lighter than expected.” Still, incoming data underscore the “post-pandemic theme of a higher floor for prices,” with the Schwab Center noting “some stickiness around the upper 2% range.”
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Visa (V, -4.4%) was a major drag as 14 of the 30 Dow Jones stocks closed in the red. The credit card company and its main competitor, Mastercard (MA, -3.8%), were already threatened by President Donald Trump’s recent proposal to cap credit-card interest rates at 10% for one year.
V and MA declined Tuesday after the president talked about a new Credit Card Competition Act that would mandate a choice for merchants of alternative and lower-cost credit-card routing options.
All about EPS
Stocks were in the red today, led there by financials, consumer discretionary stocks, health care and technology. But the earnings calendar offers potential fuel for more upside, according to John Butters of FactSet, who asks and answers a key question.
“Given concerns in the market about inflation and tariffs,” the analyst wonders, “did analysts lower EPS estimates more than normal for S&P 500 companies for the fourth quarter? The answer is no.” As Butters details, analysts increased earnings-per-share estimates by an aggregate 0.5% to $70.50 from $70.16 during the fourth quarter.
“In a typical quarter, analysts usually reduce earnings estimates during the quarter,” Butters says. The average decline in the earnings-per-share estimate over the past 20 quarters, or five years, is 1.6%. Over 10 years, it’s 3.1%. Indeed, as Butters concludes, this is the second straight three-month period where analysts have raised aggregate EPS estimates during the quarter.
The yield on the 2-year Treasury note declined to 3.526%, and the yield on the 10-year Treasury was down to 4.175%. The U.S. Dollar Index (DXY) was firmer too, rising from 98.86 on Monday to 99.14.
By the closing bell, the Nasdaq Composite was off 0.1% at 23,709, the S&P 500 had shed 0.2% to 6,963, and the Dow Jones Industrial Average was down 0.8% at 49,192.
Jamie Dimon for the Fed…
“Everyone we know believes in Fed independence, and so do we,” JPMorgan Chase (JPM, -3.8%) CEO Jamie Dimon said during a conference call to discuss fourth-quarter earnings for one of the most important financial stocks in the world on Tuesday morning.
“Anything that chips away at that is probably not a great idea,” Dimon explained. “And, in my view, it will have the reverse consequences. It will raise inflation expectations and probably increase interest rates over time.”
Dimon’s bank reported earnings of $4.63 per share (-3.7% year over year), missing a consensus forecast for EPS of $4.85, on revenue of $45.80 billion (+7.1% YoY).
Support for the Fed and Powell extends beyond the class of “too big to fail” CEOs. “We stand in full solidarity with the Federal Reserve System and its Chair Jerome H. Powell,” European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and eight other top central bankers said in a joint statement on Tuesday.
“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” they write. “It is therefore critical to preserve that independence, with full respect for the rule of law and democratic accountability.”
Top central bankers in Sweden, Switzerland, Canada, Denmark, Norway, Australia, South Korea and Brazil, as well as the chair and the general manager of the Bank for International Settlements, also signed the letter.
INTC and AMD surge on upgrades
Advanced Micro Devices (AMD, +6.4%) and Intel (INTC, +7.3%) were up on Tuesday even though tech stocks as a group were down after the chipmakers earned upgrades from KeyBanc analyst John Vinh.
The analyst now rates both semiconductor stocks Overweight (Buy). According to Vinh, AMD and Intel have sold their respective server CPU inventory for 2026 in another positive sign for the AI boom.
Vinh’s $60 12-month target price for INTC is one of the highest among Wall Street analysts who cover the stock. “Our checks indicate Intel is almost sold out for the year in server CPU,” the analyst observes, noting that management is considering a 10% to 15% price increase.
Vinh forecast growth of more than 50% for AMD’s server CPU revenue, also supported by price increases. The analyst says he’s seeing strong demand for AMD’s MI335 in the first half and a “significant ramp” for MI455 in the second half. Vinh’s 12-month target price for AMD is $270.
