Bull market turns four; bank earnings and CPI are the test

Good morning. Monday was a quiet one for US stocks. With the bond market closed, the S&P 500 slipped 0.05% to 7,807.79 while the Dow rose 198 points, a mixed finish as everyone waited for this week's bank earnings and inflation data.

It was a notable date, though. The S&P 500 is up nearly 120% from its October 2022 low, marking the bull market's fourth birthday, with the AI boom adding about $40 trillion in market value. Under the surface the picture is different: 60% of S&P 500 stocks are down more than 20% from their highs, and a few giant AI names are propping up the index. Goldman Sachs nonetheless turned bullish through year-end, citing improving earnings and lower valuations.

Earnings season opens now. JPMorgan, Goldman Sachs, Wells Fargo and Citigroup report Tuesday. Expectations are unusually high, to the point that some say results need to be ridiculously good. On Wednesday comes September inflation. The Fed would like to avoid a hike this month, but whether prices allow that is the question. Cleveland Fed President Hammack said rates aren't yet high enough, leaving the door open to more.

Energy news was mixed. President Trump announced a Russia-Ukraine pause on attacks on energy facilities and a Russian diesel supply deal, which briefly lowered oil, but Ukraine said Russia broke the truce. With Riyadh's airport also attacked, worries are growing that $100 Brent could last.