U.S. Stock Markets Rise as Earnings Reports Exceed Expectations
Major Indexes Show Positive Movement
The S&P 500 Index ($SPX) (SPY) is up +0.67%, while the Dow Jones Industrials Index ($DOWI) (DIA) has seen a modest increase of +0.04%. The Nasdaq 100 Index ($IUXX) (QQQ) leads with a rise of +1.32%. Additionally, March E-mini S&P futures (ESH25) are up by +0.71%, and March E-mini Nasdaq futures (NQH25) have increased by +1.41%.
Positive Earnings Propel Stocks Higher
Stocks are trading higher today, with the Dow Jones Industrials reaching an 8-week high. Positive earnings results and optimistic forecasts from technology firms are driving gains. Apple shares have increased by over +1% following its stronger-than-expected forecast. Atlassian has surged over +16% after posting Q2 revenue that exceeded expectations and raising its full-year revenue estimate. AbbVie shares are also up by more than +6% due to reporting Q4 adjusted EPS above consensus and a promising 2025 EPS forecast.
U.S. Economic Indicators Support Market Trends
Stock indexes continued to rise after U.S. economic data revealed that December personal spending climbed more than anticipated, while the December core PCE price index—the Federal Reserve’s preferred measure of inflation—matched expectations.
Challenges from Dividend Suspension
On a negative note, Walgreens Boots Alliance has dropped more than -13% after announcing a suspension of its quarterly dividend to fortify its balance sheet. PPG Industries is also down more than -5% following a weaker-than-expected adjusted EPS report for Q4 and a below-consensus 2025 forecast.
Policy Concerns Weigh on Markets
Investor sentiment is additionally affected by expectations that President Trump may impose a 25% tariff on Canadian and Mexican imports, citing concerns over trade deficits and fentanyl flow.
Personal Spending and Inflation Metrics
U.S. personal spending in December increased by +0.7% month-over-month, surpassing the +0.5% expected. Personal income also rose by +0.4% month-over-month, aligning with projections. The core PCE price index for December grew by +0.2% month-over-month and +2.8% year-over-year, consistent with forecasts.
Labor Market Insights
The Q4 employment cost index rose by +0.9%, matching expectations. However, the January MNI Chicago PMI increased by only 2.5 points to 39.5, falling short of the expected 40.0. Insights from Federal Reserve officials today indicated a cautious stance on future interest rate adjustments, particularly as inflation rates remain a focus.
Earnings Season Updates
As earnings season progresses, analysts predict S&P 500 earnings grew by +7.5% year-over-year in Q4, marking the second-highest pre-season forecast in three years. Currently, chances for a -25 basis point rate cut at the March 18-19 FOMC meeting stand at 17%.
International Market Movements
Globally, stock markets are trending upward. The Euro Stoxx 50 has reached a new 24-year peak, with a gain of +0.18%. Meanwhile, the Shanghai Composite Index in China is closed for the Lunar New Year holiday. Japan’s Nikkei Stock 225 finished the day up +0.15%.
Interest Rates Update
March 10-year T-notes (ZNH25) are down -2 ticks, with the yield rising +0.8 basis points to 4.525%. T-notes are experiencing pressure from stock rallies which have reduced demand for safe-haven government debt. Additionally, hawkish remarks from Federal Reserve officials are contributing to downward pressure.
European Markets and Expectations
In Europe, government bond yields are trending lower. The 10-year German bund yield has fallen to a 3.5-week low at 2.455%, while the UK gilt yield is down to 4.517%, a 6-week low. Recent inflation expectations from the ECB indicated a rise to +2.8% for one-year projections, slightly exceeding predictions.
Notable Company Movements
Apple (AAPL) reported Q1 revenue of $124.3 billion, surpassing expectations, and has seen its stock increase by over +1%. Eastman Chemical (EMN) led gains in the S&P 500 with a +7% rise after reporting Q4 adjusted EPS of $1.87, exceeding forecasts.
Atlassian (TEAM) surged by more than +16% after Q2 revenue hit $1.29 billion and full-year revenue estimates were raised significantly. AbbVie (ABBV) is also seeing gains after surpassing EPS expectations. Baker Hughes (BKR) reported Q4 revenue of $7.36 billion, above consensus, leading to a +5% increase in stock prices.
Declines in the Market
Deckers Outdoor (DECK) is leading losses, down over -16% after revealing full-year net sales forecasts below consensus. Walgreens Boots Alliance remains down more than -13% after its dividend suspension, while WW Grainger (GWW) has seen a -7% decline following weaker sales forecasts.
Upcoming Earnings Reports
Scheduled earnings reports for January 31, 2025, include AbbVie Inc (ABBV), Aon PLC (AON), Charter Communications Inc (CHTR), Chevron Corp (CVX), and others.
On the date of publication,
Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
here.
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