By Liz Moyer
Investing.com -- Stocks sold off after inflation data showed prices rose the most in 41 years in June, and that's setting things up for another big rate hike later this month.
The Federal Reserve has just a couple of weeks until its next two-day meeting, at which it is expected to decide on the next move forward on rates. It raised rates a 0.75-percentage-point in June and before Wednesday was seen heading in that direction again, and then the CPI for June came out. A 9.1% jump in prices over the 12 months ending in June was more than expected, and could embolden the Fed to act more aggressively.
Investors are now betting that the Fed will deliver a 1% rate hike this month (as Canada did on Wednesday), bringing the central bank closer to reaching a restrictive stance on monetary policy. Following the CPI report, Atlanta Federal Reserve President Raphael Bostic fueled further speculation of a 1% rate hike, saying "everything was in play."
Bank stocks will be in the spotlight on Thursday as JPMorgan and Morgan Stanley kick off earnings for major Wall Street banks. Investment banking and advisory might be weak spots, and trading might be a highlight. But banks could also take a hit down the road if consumer credit quality starts to deteriorate in a recession environment.
Here are three things that could affect markets tomorrow:
1. JPMorgan earnings
The biggest U.S. bank, JPMorgan Chase & Co (NYSE:JPM) is seen reporting earnings per share of $2.94 on revenue of $31.8 billion. Analysts will be listening for CEO Jamie Dimon's outlook after he said a few weeks ago that a hurricane was coming in the U.S. economy.
2. Morgan Stanley earnings
Morgan Stanley (NYSE:MS), an investment bank with a giant wealth management business, is seen reporting earnings per share of $1.57 on revenue of $13.4 billion.
3. Taiwan Semiconductor
With chipmakers in focus, Taiwan Semiconductor Manufacturing (NYSE:TSM) is expected to report earnings per share of $1.43 on revenue of $17.7 billion.