Market Update: S&P 500 Reaches New Heights Amid Mixed Earnings Reports
The S&P 500 Index ($SPX) (SPY) is up +0.14% today, while the Dow Jones Industrials Index ($DOWI) (DIA) has dipped -0.10%. The Nasdaq 100 Index ($IUXX) (QQQ) shows an increase of +0.06%. However, March E-mini S&P futures (ESH25) are down -0.17%, and March E-mini Nasdaq futures (NQH25) are down -0.15%.
Today, stocks are mostly making gains, with the S&P 500 hitting a new all-time high and the Nasdaq 100 reaching a five-week high. One of the key drivers behind the rise is President Trump’s recent comments, in which he softened his stance on tariffs with China, the world’s second-largest economy. During a Fox News interview on Thursday night, he expressed a preference against implementing tariffs on China and has also refrained from imposing tariffs on Europe, though he warned of potential tariffs on Canada and Mexico.
On the downside, some companies have reported disappointing earnings. Texas Instruments’ stock is down over -5% following a forecast of weaker-than-expected Q1 earnings per share (EPS). American Express has seen a drop of more than -2% after higher-than-anticipated total expenses in Q4. CSX Corp is down over -3% as its Q4 revenue fell short of forecasts.
Earnings season is well underway, with companies sharing their Q4 results. According to Bloomberg Intelligence, analysts predict that S&P 500 earnings will grow by +7.5% year-over-year for Q4, marking the second-highest projection before the season in the last three years.
The markets currently assign a 1% chance for a -25 basis point rate cut at the upcoming January 28-29 Federal Open Market Committee (FOMC) meeting.
Internationally, stock markets are showing mixed results today. The Euro Stoxx 50 has surged to a 24-year high with a gain of +0.59%. Meanwhile, China’s Shanghai Composite Index increased by +0.70%. In contrast, Japan’s Nikkei Stock 225 fell -0.07% after reaching a two-and-a-half-week high.
Interest Rates
The March 10-year T-notes (ZNH25) remain unchanged today, with the 10-year T-note yield stable at 4.638%. Support for T-notes has been bolstered by President Trump’s comments indicating a milder tariff approach towards China, easing inflation fears. However, rising European government bond yields are putting pressure on U.S. T-note prices.
European government bond yields are on the rise today. The yield on 10-year German bunds has climbed to a one-week high of 2.584%, up +2.9 basis points to 2.578%. Additionally, the 10-year UK gilt yield increased by +1.7 basis points to 4.652%.
The January Eurozone S&P manufacturing PMI rose by +1.0 to 46.1, surpassing expectations of 45.4. Furthermore, the January Eurozone S&P composite PMI increased by +0.6 to 50.2, exceeding expectations of 49.7 and marking the highest level in five months.
Market swaps indicate a 97% chance of a -25 basis point rate cut by the ECB during its policy meeting on January 30.
US Stock Movers
Twilio (TWLO) has surged by over +22% after reporting preliminary Q4 revenue growth of approximately +11% year-over-year, outperforming the consensus estimate of +8% year-over-year.
Affirm Holdings (AFRM) has risen by more than +2% following confirmation from Liberty Mutual that it will purchase up to $750 million of Affirm’s installment loans through June 2027.
Moderna (MRNA) gained over 2% after receiving a tender to supply its Covid-19 vaccine to the European Union, Norway, and North Macedonia for a period of up to four years.
Middleby Corp (MIDD) saw an increase of more than +11% after the Wall Street Journal reported that Garden Investments has acquired a 5% stake in the company and is planning advocacy for changes aimed at boosting its stock value as well as seeking board positions.
Meta Platforms (META) is up over +1% after CEO Mark Zuckerberg announced a 2025 capital expenditure forecast of $60 billion-$65 billion, significantly higher than the consensus of $51.31 billion.
Verizon Communications (VZ) gained more than +1%, leading the Dow Jones Industrials’ gainers, after it announced Q4 adjusted EPS of $1.10, exceeding the consensus estimate of $1.09.
Oshkosh Corp (OSK) is also up more than +1% following an upgrade from KeyBanc Capital Markets to overweight from sector weight, with a price target set at $113.
However, chip stocks are dragging the market down, particularly Texas Instruments (TXN), which is down -5% after issuing a weaker-than-expected Q1 EPS forecast. Other companies in this sector, like Analog Devices (ADI) and Microchip Technology (MCHP), have also declined by over -3%. Intel (INTC) has decreased more than -2%, while several others, including ON Semiconductor (ON), Qualcomm (QCOM), GlobalFoundries (GFS), and Applied Materials (AMAT), are down more than -1%.
CF Industries Holdings (CF) is down over -6%, leading losses in the S&P 500, after JPMorgan Chase downgraded it to underweight from neutral with a price target of $75.
Intuitive Surgical (ISRG) has seen a decline of more than -4%, following a forecasted full-year gross profit margin of 67% to 68%, which falls short of the consensus of 68.6%.
CSX Corp (CSX) is down more than -3% after reporting Q4 revenue of $3.54 billion, below the consensus estimate of $3.57 billion.
Airbnb (ABNB) dropped more than -2% amid indications of insider selling following an SEC filing revealing that CEO Chesky sold $5.12 million worth of shares on Tuesday.
American Express (AXP) is also down more than -2%, leading losses in the Dow Jones Industrials after revealing Q4 total expenses of $13.1 billion, surpassing the consensus of $12.88 billion. AutoNation (AN) fell more than -1% after Stephens downgraded it to equal weight from overweight.
Earnings Reports (1/24/2025)
Companies reporting earnings today include American Express Co (AXP), Crown Castle Inc (CCI), HCA Healthcare Inc (HCA), NextEra Energy Inc (NEE), and Verizon Communications Inc (VZ).
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
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