Stock Market Climbs as Earnings Surprise Investors
Market Overview
Today, the S&P 500 Index ($SPX) (SPY) has increased by +0.45%. The Dow Jones Industrials Index ($DOWI) (DIA) is up +0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) has gained +0.85%. March E-mini S&P futures (ESH25) rose by +0.42%, while March E-mini Nasdaq futures (NQH25) are up by +0.88%.
Stock indexes are trending upward, with the Dow Jones Industrials reaching an 8-week high. Better-than-expected earnings reports have lifted market sentiment. Apple has seen a boost, rising over +2% after it provided a stronger-than-expected outlook. Likewise, Atlassian has surged more than +17% after posting Q2 revenues that exceeded expectations and raising its full-year revenue forecast. AbbVie also joins the gainers with more than a +7% increase following its Q4 earnings which surpassed forecasts.
Stocks maintained their upward trajectory after the latest US economic data showed personal spending for December rose by more than anticipated. Additionally, the core PCE price index, the Federal Reserve’s favored gauge for inflation, met expectations.
Mixed Results Among Major Players
However, not all news is positive. Walgreens Boots Alliance dropped more than -10% after announcing the suspension of its quarterly dividend to bolster its balance sheet. PPG Industries also fell by more than -5% following poorer-than-expected Q4 earnings and a bleak forecast for 2025 adjusted EPS.
Compounding market concerns are reports that President Trump may impose a 25% tariff on imports from Canada and Mexico, raising fears about inflation and further trade tensions.
The data showed that US personal spending for December rose by +0.7% month-over-month, surpassing the +0.5% forecast. Personal income increased by +0.4% month-over-month, in line with expectations. Furthermore, the December core PCE price index rose +0.2% month-over-month and +2.8% year-over-year, matching estimates.
The Q4 employment cost index inched up by +0.9%, also meeting expectations. Despite these positive reports, hawkish remarks from Fed Governor Bowman, who expressed a desire for inflation to decrease before further adjustments to interest rates, had a cooling effect on markets.
Global Market Trends
International markets reflect a similar trend, with overseas stock indexes trending higher. The Euro Stoxx 50 hit a fresh 24-year high, achieving a +0.18% increase. Meanwhile, China’s Shanghai Composite did not trade today due to the Lunar New Year holidays, and Japan’s Nikkei Stock 225 closed up by +0.15%.
Interest Rates Update
The March 10-year Treasury notes (ZNH25) dipped -3 ticks, with the yield edging up +0.8 basis points to 4.525%. Safe-haven demand for government debt has lessened due to stock market gains. Concerns mentioning President Trump’s tariffs have also pressured Treasury notes as they could escalate inflation and impact Fed policy.
The slumps in T-notes were somewhat mitigated by a rally in European government bonds, and inflation apprehensions calmed after the employment index and the core PCE data were in line with estimates.
European yields dipped as well, with German bunds hitting a 3.5-week low at 2.463%, down -3.9 basis points to 2.480%. The UK gilt yields fell to 4-week lows of 4.522%, down -2.9 basis points.
In Germany, December retail sales unexpectedly dropped by -1.6% month-over-month, marking the steepest decline in two years. January’s unemployment rate also rose +0.1 to a four-year high of 6.2%, indicating a weaker labor market than anticipated.
Swaps currently indicate a 21% likelihood of a -25 basis point rate cut by the European Central Bank at the upcoming March 6 meeting.
Company Highlights
Apple (AAPL) is leading the gainers in the Dow Jones Industrials, up more than +2% after reporting Q1 revenue of $124.3 billion, surpassing the anticipated $124.1 billion, and projecting Q2 sales growth in the low-to-mid single digits.
AbbVie (ABBV) climbs more than +7% in the S&P 500 after reporting Q4 adjusted EPS of $2.16, exceeding the consensus of $2.13, and forecasting 2025 adjusted EPS in the range of $12.12-$12.32, with the midpoint above the consensus target.
Eastman Chemical (EMN) increased over +6%, citing a Q4 adjusted EPS of $1.87, strongly outpacing the consensus of $1.57.
Atlassian (TEAM) surged more than +17%, reporting Q2 revenue of $1.29 billion, which exceeded expectations of $1.24 billion while raising its annual revenue forecast. Charter Communications (CHTR) climbed over +6% after reporting a Q4 adjusted EBITDA of $5.80 billion, above the consensus of $5.72 billion.
Baker Hughes (BKR) is up more than +4% after reporting Q4 revenue of $7.36 billion, outperforming the consensus of $7.07 billion.
Vertex Pharmaceuticals (VRTX) is also up more than +4%, following FDA approval for its non-opioid pain treatment, Journavx.
LPL Financial Holdings (LPLA) has gained over +1% after reporting total net new assets of $157.3 billion, vastly exceeding the expected $106.1 billion.
In contrast, Walgreens Boots Alliance (WBA) is down more than -15%, leading losses in the S&P 500 after its dividend suspension. Deckers Outdoor (DECK) fell by over -14% after disclosing a full-year net sales forecast of $4.90 billion, below the consensus of $4.93 billion. WW Grainger (GWW) is down more than -7%, forecasting 2025 net sales between $17.6 billion and $18.1 billion, shy of the $18.17 billion consensus.
PPG Industries (PPG) dropped over -5%, with Q4 adjusted EPS of $1.61 falling short of the $1.65 consensus and providing a disappointing 2025 adjusted EPS forecast.
Boot Barn (BOOT) also fell more than -5% with guidance of Q4 EPS below estimates. Chevron (CVX) led declines in the Dow Jones, down more than -3%, after its Q4 adjusted EPS missed consensus, as did Occidental Petroleum (OXY), which received a downgrade from Goldman Sachs.
Autoliv (ALV) is down more than -2%, facing a sales report that fell short of expectations.
Earnings Reports (1/31/2025)
Companies reporting earnings include AbbVie Inc (ABBV), Aon PLC (AON), Broadridge Financial Solutions (BR), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Colgate-Palmolive Co (CL), Crown Castle Inc (CCI), Eaton Corp PLC (ETN), Exxon Mobil Corp (XOM), Franklin Resources Inc (BEN), LyondellBasell Industries NV (LYB), Phillips 66 (PSX), Revvity Inc (RVTY), and WW Grainger Inc (GWW).
On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. All information is for informational purposes. Please refer to the Barchart Disclosure Policy for more details.
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The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
