5 Things to Know Before the Stock Market Opens on Tuesday

Stock futures are mixed as investors process major bank earnings from JPMorgan, Bank of America, Wells Fargo, Goldman Sachs, and Citigroup while awaiting June CPI to confirm whether inflation moderated. Fed Chair Kevin Warsh is scheduled to testify before Congress today and tomorrow regarding the economy and the Fed’s inflation plans. Tech sector volatility is driving divergent moves, with SK Hynix shares surging and IBM shares plunging.

Analysis

The bank tape is likely to be driven more by the CPI path than by the prints themselves. A cooler inflation read would help the front end and ease recession odds, but it is not an unambiguous positive for lenders: lower policy expectations can compress NII even as credit and capital-markets risk improve. That favors the franchises with fee diversity, deposit depth, and trading leverage — JPM and, to a lesser extent, GS — over rate-sensitive balance-sheet lenders where earnings power is still tied to deposit costs and loan growth.

The bigger structural signal is the divergence between AI infrastructure and legacy enterprise software/services. SK Hynix strength implies the market still sees hard scarcity in HBM and memory supply, which tends to cascade into equipment, packaging, and foundry capex for 2-3 quarters. IBM weakness is more about capital rotating away from slow-growth cash generators that need visible AI monetization; unless it can prove incremental AI revenue without margin dilution, the multiple deserves to stay capped.

The contrarian risk is that the macro event is being over-traded: a benign CPI may simply pull forward rate-cut hopes without changing bank EPS, while a hot print would hit both duration-sensitive tech and financials at once. The cleanest falsifier for the AI hardware trade is evidence that HBM pricing or capacity expansion is normalizing; for IBM, it is another quarter of stable recurring revenue plus margin resilience, which would argue the selloff is overdone. Near term, this looks like a flow-driven market where positioning can outweigh fundamentals for days, but the 1-3 month path still favors capital-light AI suppliers over legacy IT names.

Key Decisions for Investors

• Stay light banks into CPI; only add to JPM/GS on a soft inflation print if 10Y yields break lower, since the first move should favor quality fee franchises over spread lenders.