US Stock Markets Surge to New Heights on Positive Economic Indicators
The S&P 500 Index ($SPX) (SPY) closed up +1.04% on Thursday, while the Dow Jones Industrials Index ($DOWI) (DIA) increased by +0.77%. The Nasdaq 100 Index ($IUXX) (QQQ) saw an even bigger jump, closing up +1.43%. Additionally, March E-mini S&P futures (ESH25) rose by +0.99%, and March E-mini Nasdaq futures (NQH25) jumped +1.28%.
Market Rally Fueled by Decreased Bond Yields
On Thursday, the stock markets experienced a rally, with the S&P 500 reaching a 1.5-week high and the Nasdaq 100 hitting an 8-week high. This upward momentum was driven by a decline in bond yields following the release of January’s Producer Price Index (PPI) report, which suggested favorable conditions for the upcoming Personal Consumption Expenditures (PCE) price index report. Several components of the PPI, particularly in healthcare and airfares, showed drops that helped ease inflation concerns.
Presidential Action and Corporate Earnings Spark Market Activity
The afternoon session further solidified gains as President Trump signed a directive for the US Trade Representative and Commerce Secretary to consider tariffs on a country-by-country basis, with plans for negotiations to unfold before prompting immediate action. Commerce Secretary nominee Lutnick indicated that studies would be completed by April 1, prepping for possible tariffs.
Corporate earnings reports released on Thursday produced mixed results. MGM Resorts International surged over +17% after reporting Q4 net revenue that surpassed expectations. Meanwhile, Molson Coors Beverage Co saw gains of more than +9% with higher-than-expected Q4 underlying EPS. General Electric HealthCare Technologies also performed well, closing up +8% due to better forecasts and earnings.
Challenges Amid Positive Economic Indicators
Despite the rally, some economic indicators posed hawkish signals for the Federal Reserve. US initial unemployment claims fell to 213,000, lower than the forecast of 216,000, suggesting a robust labor market. Meanwhile, January PPI final demand increased by +3.5% year over year, exceeding the anticipated +3.3% and marking the most significant rise in nearly two years.
For the remainder of the week, the market will be closely monitoring Friday’s January retail sales report and the manufacturing production figures, with expectations for a -0.2% decline and a +0.1% rise, respectively.
International Markets Reflect Mixed Trends
Globally, European stocks also surged, with the Euro Stoxx 50 reaching a remarkable 25-year high. Investors are feeling hopeful about a potential end to the Ukraine conflict following US-Russia discussions. In Asia, the Shanghai Composite Index decreased by -0.42%, while the Nikkei Stock 225 climbed to a 1.5-week high, closing up +1.28%.
Interest Rate Dynamics
In fixed income, March 10-year T-notes (ZNH25) closed up +22.5 ticks, with yields falling by -9.4 basis points to reach 4.527%. The drop in T-note yields was bolstered by strength in European government bonds, as well as lower expectations from the PPI report and crude oil prices.
Despite this, other factors, like lower jobless claims and rising producer prices, are considered hawkish for Fed policy, contributing to a mixed sentiment around interest rates. European bond yields also saw a downward trend, with the 10-year German bund yield and the 10-year UK gilt yield falling by -5.9 bp and -5.2 bp, respectively.
Key Stock Movers on Thursday
MGM Resorts International (MGM) led gains in the S&P 500, closing up more than +17% after reporting a Q4 net revenue of $4.35 billion, exceeding the expected $4.28 billion. Chip stocks rallied as well, with Intel (INTC) gaining over +6% and ARM Holdings (ARM) increasing by +5%.
AppLovin (APP) reported Q4 earnings significantly above expectations, leading to a +24% increase. Other notable gainers included Molson Coors Beverage Co (TAP), GE HealthCare Technologies (GEHC), and HubSpot (HUBS).
On the opposite side, West Pharmaceutical Services Inc (WST) dropped more than -38% after sharing that its 2025 adjusted EPS forecast fell short of expectations. Trade Desk (TTD) saw a similar trend, closing down over -32% after its revenue forecast didn’t meet consensus estimates.
Upcoming Earnings Reports
Mark your calendars for February 14, 2025, when major earnings reports from Crown Castle Inc (CCI), Globant SA (GLOB), Ingram Micro Holding Corp (INGM), Moderna Inc (MRNA), and Standardaero Inc (SARO) will be released.
On the date of publication, Rich Asplund did not hold any positions in any of the securities mentioned in this article. All information here is for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
