Market Update: Mixed Indicators as Stocks React to Economic News
S&P 500, Dow Continue Upward Trend; Nasdaq Faces Challenges
The S&P 500 Index ($SPX) (SPY) closed up +0.11% on Tuesday, while the Dow Jones Industrials Index ($DOWI) (DIA) gained +0.52%. Meanwhile, the Nasdaq 100 Index ($IUXX) (QQQ) saw a slight decline of -0.13%. March E-mini S&P futures (ESH25) are up +0.27%, and March E-mini Nasdaq futures (NQH25) are up +0.11%.
Market Gains Supported by Tariff Developments and Economic Data
On Tuesday, stocks experienced a mixed finish. The market received a boost from a Bloomberg report indicating that President-elect Trump’s economic team is considering a gradual approach to increasing trade tariffs, aimed at preventing an inflation spike. Additionally, the US December producer price index (PPI) rose less than anticipated, easing inflation fears and creating positive sentiments ahead of the Consumer Price Index (CPI) report due on Wednesday.
Corporate Earnings Weigh on Market Momentum
Despite the positive economic indicators, stock indexes retreated from their highs due to some disappointing corporate news. Eli Lilly reported a Q4 preliminary revenue of $13.5 billion, falling short of the $14.0 billion consensus, which led to a drop of over -6% in its stock. Meta Platforms also faced a decline of more than -2% after announcing a 5% workforce reduction linked to performance evaluations. The overall market was impacted by declines in major technology stocks.
Anticipation Builds for Consumer Price Report
The December PPI showed a +0.2% month-over-month rise and a +3.3% year-over-year increase, both below expectations, which forecasted +0.4% month-over-month and +3.5% year-over-year. Analysts are now looking to Wednesday’s US consumer price report for signs of persistent inflation that could influence Federal Reserve policy. The December CPI is expected to rise to +2.9% year-over-year, up from +2.7% in November.
Upcoming Earnings Reports and Market Projections
This week marks the beginning of earnings season, with major banks set to report Q4 results. Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo are all scheduled for Wednesday. Bloomberg Intelligence forecasts a 7.5% increase in S&P 500 earnings for Q4, marking the second-highest pre-season projection in three years.
Global Market Trends
Tuesday’s overseas stock markets displayed mixed results, as the Euro Stoxx 50 rose +0.53%, and China’s Shanghai Composite Index increased by +2.54%. Conversely, Japan’s Nikkei Stock 225 fell, closing down -1.83%.
Interest Rate Insights
March 10-year T-notes (ZNH25) gained +4 ticks on Tuesday. The yield for the 10-year T-note slightly fell -0.2 basis points to 4.788%. The gains came after the report about President-elect Trump’s tariff strategy, as well as the weaker-than-expected US PPI report.
Challenges for T-Notes Amid Supply Concerns
Meanwhile, rising inflation expectations exerted pressure on T-notes, with the 10-year breakeven inflation rate climbing to a 14-1/2 month high of 2.476%. Concerns over new supply also persisted, as market participants anticipate approximately $40 billion to $45 billion in corporate debt securities this week.
European Bond Yields and ECB Perspectives
European government bond yields rose on Tuesday, with the 10-year German bund yield hitting a 7-month high of 2.653%. The UK 10-year gilt yield increased +0.5 basis points to 4.889%. ECB Council member Holzmann expressed uncertainty about future rate cuts in January, noting ongoing “hiccups” in Eurozone inflation.
Movers and Shakers in the Stock Market
In stock movements, homebuilders rallied, with KB Home (KBH) rising over +4% after announcing a Q4 EPS of $2.52, outpacing the $2.44 consensus estimate. United Rentals (URI) surged by more than +5% following its acquisition of H&E Equipment Services. Celanese Corp (CE) gained over +5% due to an upgrade from Bank of America.
On the losing side, ELI Lilly (LLY) led declines in the S&P 500, closing down more than -6%. Major tech stocks also faced downward pressure, with Nvidia (NVDA), Netflix (NFLX), and Alphabet (GOOGL) down more than -1%. Signet Jewelers (SIG) saw a dramatic drop of over -21% following a lowered sales forecast.
Earnings Reports (1/15/2025)
Expect earnings reports from Bank of New York Mellon Corp/T (BK), Blackrock Inc (BLK), Citigroup Inc (C), Goldman Sachs Group Inc (GS), JPMorgan Chase & Co (JPM), and Wells Fargo & Co (WFC).
On the date of publication, Rich Asplund did not hold any positions in the mentioned securities. All information and data provided are for informational purposes only. To learn more, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
