Investing.com -- Stocks rallied on Thursday after a second inflation gauge came up cooler than expected, stoking hopes that the Federal Reserve could be near the end of its interest rate increases.
Of course, the market is still anticipating another quarter of a percentage point rate hike later this month. But fresh evidence that inflation is cooling faster than expected could give the Fed reason to hold off on further rate increases.
The producer price index reading came in below expectations just a day after a report on consumer prices in June showed a slower pace of growth than expected. The Fed has been aggressively raising rates over the past year to push inflation back toward its 2% target.
While Fed officials have said in recent weeks that their job isn't yet done on inflation, evidence that its actions to now are taking hold could make it more cautious about rate hikes down the road.
Second quarter earnings season could also give the Fed food for thought, as executives make statements about current business and consumer demand and their outlook for the remainder of the year.
Here are three things that could affect markets tomorrow:
1. Bank earnings
Big banks kick off their earnings on Friday. JPMorgan (NYSE:JPM) is expected to report earnings per share of $3.96 on revenue of $39.1 billion. Citigroup (NYSE:C) is expected to report earnings per share of $1.37 on revenue of $19.6B. Wells Fargo (NYSE:WFC) is expected to report earnings per share of $1.18 on revenue of $20.1B.
2. UnitedHealth earnings
UnitedHealth Group Incorporated (NYSE:UNH) is expected to report earnings per share of $6.06 on revenue of $90.9B.
3. Consumer sentiment
University of Michigan's consumer sentiment reading for July, due out at 10:00 ET (14:00 GMT) is expected to show 65.5, above the 64.4 recorded earlier.