Wednesday, January 29, 2025
After a steady start, the market indexes took a dip today as the Federal Reserve announced it would keep interest rates unchanged at +4.25-4.50% for the second consecutive meeting. This news led to a decline for several major indexes: the Dow fell by -136 points, the S&P 500 decreased by -28 points, the Nasdaq dropped -103 points, and the Russell 2000, which tracks small-cap stocks, lost -4 points.
Interest Rates Held Steady Amid Solid Economic Indicators
During the press conference that followed the Fed’s monetary policy meeting, Chair Jerome Powell expressed a positive outlook on the current U.S. economy. Inflation is now closer to the Fed’s target of +2% compared to past adjustments and has recently climbed to +3% from +2.4% in September. Unemployment rates have remained low and stable since mid-2024, indicating a solid job market.
Powell noted that wage growth is not a major inflation driver, given its slowdown over the last year. Housing activity appears stable, bolstered the economy’s resilience through strong consumer spending. Emphasizing the Fed’s commitment to its +2% inflation target, Powell hinted that more changes in policy would depend on future developments, especially concerning tariffs.
Key Earnings Reports Bring Mixed Reactions
Today marked a significant day for earnings reports, with several major technology companies and AI-focused firms revealing their quarterly results. While some numbers exceeded expectations, market reactions varied widely.
Microsoft MSFT shares sank slightly after reporting earnings of $3.23 per share, beating Zacks’ consensus of $3.11 and increasing from $2.93 in the same quarter last year. Revenue reached $69.63 billion, surpassing expectations of $68.70 billion. Although Azure’s growth dipped to +31% from +33% the prior quarter, +13% of that growth stemmed from AI services. Initially down -5%, shares rebounded before the post-earnings conference call.
Tesla TSLA initially experienced a decline after falling short of Q4 projections. Earnings of 73 cents per share fell 2 cents below expectations, while revenues of $25.71 billion missed the forecast of $27.50 billion. Nevertheless, the company’s commitment to offering more affordable vehicles and its positive outlook for energy storage and cybercab production helped lift shares back into the green.
Meta Platforms META reported a significant earnings beat for Q4, with earnings at $8.02 per share, exceeding projections of $6.68. Revenue was also above expectations at $48.39 billion, compared to $46.97 billion anticipated. Although Daily Active Users slightly outperformed estimates at 3.35 billion, Q1 revenue guidance fell short of expectations, sending shares down -1%.
IBM stocks soared +12% after it posted impressive Q4 results, where earnings of $3.92 per share surpassed the expected $3.73. Revenue, however, was just under the Zacks consensus at $17.55 billion. The company’s AI bookings contributed +$5 billion, and non-GAAP gross margins reached +60.6%, above estimates.
ServiceNow NOW reported earnings of $3.67 per share, which beat expectations of $3.58. Revenue also saw an increase, coming in at $2.96 billion, slightly above the $2.95 billion forecast. However, lowered Q1 revenue guidance caused shares to drop -8%, offsetting earlier gains of +7.8% year-to-date.
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Microsoft Corporation (MSFT): Free Stock Analysis Report
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