The second full week of 2025 brings the start of earnings season along with several critical economic releases. The S&P 500 ($SPX) (SPY) saw rising volatility last week and the index has now put in a series of lower highs and is breaking some key support levels. Investors should prepare for a busy week of bank earnings, inflation data and potentially more volatility.

Here are 5 things to watch this week in the Market.

Bank Earnings Kickoff

The Q4 earnings season begins in earnest with major financial institutions reporting throughout the week. JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), and Citigroup (C) headline a busy slate of bank earnings. These reports will provide insight into lending activity, credit quality, and the impact of higher rates on bank profits. Also notable is Taiwan Semiconductor (TSM), whose results and guidance could impact the broader semiconductor sector given their crucial role in AI and chip production.

Consumer Price Index (CPI)

Wednesday at 8:30 am brings the December CPI report, a critical measure of inflation that could influence Fed policy decisions. After showing signs of cooling in recent months, markets will be watching for confirmation that inflation continues to moderate. Any surprise to the upside could challenge current market expectations for rate cuts in 2025, while lower-than-expected numbers might fuel further market optimism.

Producer Price Index (PPI)

Tuesday at 8:30 am, the PPI report will offer insight into inflation at the producer level. This upstream inflation measure often provides early signals about future consumer prices. With markets sensitive to inflation data, any significant deviation from expectations could impact rate cut expectations and market sentiment.

Retail Sales

Thursday's Retail Sales report will provide crucial information about consumer spending during the holiday season. With consumer spending driving much of the U.S. economy, this December reading takes on added significance. A strong report could suggest economic resilience, while weakness might raise concerns about consumer health and economic growth.

Thursday Economic Data Cluster

A busy Thursday morning brings both the Philadelphia Fed Manufacturing Index and Initial Jobless Claims at 8:30 am. The Philly Fed index will provide regional insight into manufacturing sector health, while jobless claims continue to be watched for any signs of labor market softening. This combination of data could paint a broader picture of economic conditions early in 2025.

Best of luck this week and don't forget to check out my daily options article.