Stocks set for weak start and Consumer prices driven higher by gasoline

U.S. stocks were poised for a lackluster open Friday, as investors seemed unfazed by stronger-than-expected earnings reports and showed a mild reaction to a key inflation report.

Dow Jones industrial average, Nasdaq-100 and S&P-500 futures were lower, but they recovered slightly following a report that inflation rose slightly less than expected last month.

Futures measure current index values against their perceived future performance and offer an indication of how markets may open when trading begins.

Robert Brusca, chief economist at Fact and Opinion Economics, said he was “disappointed” with Thursday’s report on retail sales in December, but the better-than-expected quarterly results from Intel and JPMorgan Chase are signs that brighter times lie ahead, despite the slump in futures.

“I think it’s a harbinger of good times for the future,” he said. [Read the full article]

Consumer prices rose in 2009 as gasoline prices were more than 50% higher from 2008’s depressed levels, the government said Friday.

The Consumer Price Index, the government’s key inflation reading, rose 2.7% during the past 12 months. That compares with a 0.1% rise for 2008.

The increase was due to higher gas prices, which rose 53.5% over the last year after declining 43.1% in 2008.

Food prices fell 0.5% last year after climbing 5.9% in 2008. It was the first December-to-December decline since 1961.

The so-called core CPI, which is more closely watched by economists because it excludes volatile food and energy prices, was up 1.8% over the past year, the same increase as in 2008.

December numbers. Overall prices rose 0.1% last month, driven by a sharp rise in prices for used cars and trucks. But the gain was smaller than the 0.2% rise Economists surveyed by Briefing.com had forecast. [Read the full article]

JPMorgan Chase showed it was close to making a full recovery from last year’s crisis after the company reported better-than-expected quarterly profits of $3.3 billion Friday.

The New York City-based banking giant also revealed that compensation expenses climbed 18% during the year to $26.9 billion, much of which is expected to doled out in the form of bonuses.

Kicking off the fourth quarter earnings season for the nation’s top banks, the company said it turned a tidy profit during the final three months of 2009, earning 74 cents on a per share basis.

That was much better than Wall Street was anticipating. Analysts polled by Thomson Reuters expected the company to report a profit of $2.46 billion for the quarter, or 61 cents a share.

Shares of JPMorgan Chase (JPM, Fortune 500) fell more than 1% in midday trading though as revenue numbers fell short of expectations. [Read the full article]

Thanks to the outcry against Wall Street pay, bank shareholders are in line for a little bonus of their own.

Assailed for their profligate spending just a year after a multitrillion-dollar taxpayer rescue, the big banks are trimming back on employee pay and benefits.

JPMorgan Chase (JPM, Fortune 500) set aside $1.3 billion less in the fourth quarter for its investment bankers than it did in previous quarters this year, based on compensation costs as a share of revenue.

Analysts expect Goldman Sachs (GS, Fortune 500), which earlier this year appeared on track for record bonus payouts, to have cut back on pay and perks in the fourth quarter as well – though the average paycheck for a Goldman worker is still expected to reach into the high six figures. The firm is due to report its 2009 results on Thursday.

Compensation is the banks’ biggest single expense, so anything they skim off the bonus pool flows directly to the bottom line. [Read the full article]

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