US equities close lower as credit card cap fears Trump soft inflation data

US banking sector hit by proposed credit cap

The United States (US) equity markets closed lower overnight, driven primarily by a sell-off in financial stocks. This downturn followed President Trump's proposed 10% cap on credit card interest rates, a move that sent the US banking index down 1.26%.

JPMorgan shares led the decline, sliding 4.2% to $310.90, despite the bank reporting better-than-expected fourth quarter (Q4) 2025 earnings. Its earnings per share (EPS) of $5.23 beat expectations of $4.92, and revenue of $46.8 billion exceeded the $46 billion forecast.

However, its share price was weighed down by weaker investment banking fees and warnings that the proposed 10% cap could reduce credit availability, hurt consumer access, and pressure profitability across the sector. Payment processors also suffered, with Visa dropping 4.46% to $327.88 and Mastercard losing 3.76% to $544.99

Inflation data fails to curb market fears

This sell-off in US equity indices occurred despite the release of a softer-than-expected inflation report for December. Core consumer price index (CPI) rose 2.6% year-on-year (YoY), marking its lowest level since March 2021 and coming in slightly below market expectations of 2.7%.

While it is tempting to conclude that inflation in the US is now firmly under control, concerns persist that significant tariff pass-through remains in the pipeline, mainly via core goods as businesses look to shift costs to consumers amid depleting inventories and renegotiated contracts.

Furthermore, the CPI reports for January and February will be an important test, given the usual start-of-year price increases, particularly among services including insurance, healthcare, financial services, and utilities and energy-related services.

US earnings and economic data outlook

Looking ahead, tonight sees earnings reports from Bank of America, Citigroup, and Wells Fargo ahead of the market open. Additionally, key economic data, including the producer price index (PPI) and retail sales, will be released.

Turning to the US interest rate market. Following last week’s better-than-feared December non-farm payrolls report, the US interest rate market is pricing in a 98.3% chance that the Federal Reserve (Fed) keeps rates on hold at its January meeting in two weeks' time. Nonetheless, hopes of Fed rate cuts in 2026 shine brightly, with a cumulative 52 basis points (bp) of Fed rate cuts for 2026, with the initial 25 bp cut anticipated in June and a second by December.

Nasdaq 100 technical analysis

During the final weeks of 2025, we maintained an upside bias in the Nasdaq 100 , supported by bullish seasonals and the corrective price action that played out from the October 29 high of 26,182 into the November 21 low of 23,854.

While this view has proved to be mostly correct as the Nasdaq overnight hit its highest level since early November, it is noticeable that the Nasdaq 100 has thus far failed to break to new highs in 2026, despite both the S&P 500 and the Dow Jones doing so.

This leaves the Nasdaq 100 still needing to clear the approximately 25,850 resistance area to open the way for a retest of the 26,182 record high before a potential move towards 27,000.

However, it is important to note that should the Nasdaq 100 first see a sustained fall below support at approximately 25,400 - 25,350, it would create technical damage to the uptrend and raise concerns that a pullback towards 24,600 - 24,500 is underway.

Nasdaq 100 daily chart

S&P 500 technical analysis

As noted above, both the S&P 500 and the Dow Jones have hit fresh record highs in the early days of 2026. The S&P 500's high earlier this week, at 6986, came just 14 points shy of our 7000 target.

Providing the S&P 500 remains above uptrend support at approximately 6900, drawn from the November low of 6521, allows the S&P 500 to extend its gains towards the next upside target at 7100.

However, it is important to note that should the S&P 500 first see a sustained fall below support at 6900, it would inflict technical damage to the uptrend and raise concerns that a pullback towards 6800 - 6750 is underway.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 14 January 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}