Standard & Poor’s 500 (^ GSBC) just posted its best week since the November election as a lower-than-expected inflation reading eased concerns that the Fed may rule out interest rate cuts throughout 2025.
Over the course of the week, the S&P 500 jumped more than 3%, while the Nasdaq Composite, which was dominated by technology stocks, jumped (^ IX) rose more than 2.6%. Dow Jones Industrial Average (^ DJI) led the gains, rising nearly 4%.
A light economic calendar has been prepared to greet investors with updates on activity in the services and manufacturing sector as well as a consumer sentiment update due to be released.
In corporate news, 43 S&P 500 companies are expected to report quarterly results, highlighted by Netflix (NFLX), United Airlines (first), Johnson & Johnson (JNJ) and 3M Company (Mmm).
SNP – deferred citation•US dollars
When Closed: January 17 at 5:11:45 PM EST
^ GSBC^ DJI ^ IX
Trump is scheduled to be sworn in for a second term as president on Monday. US stocks have looked sluggish at times over the past few weeks as interest rates and… Debate over whether the Fed will cut interest rates In 2025 it sent the S&P 500 to its lowest levels since the election.
But a Better than expected inflation reading on Wednesday US markets have helped rebound, and Michael Hartnett, investment strategist at Bank of America, believes stocks in the S&P 500 will be “protected” from further declines by President-elect Donald Trump in the coming months.
During his first term as president, Trump viewed the stock market as… His measure Management success. Many investors expect Trump to remain sensitive to declines in US stocks during his next cycle.
There have been rallies across some “Trump deals” such as small caps, energy stocks and financials He had fits and starts Leading to the opening. This served as an early appetizer for what many believe will be the theme of the stock market in 2025.
“January’s volatility ahead of Trump’s inauguration on 1/20 reinforces the fundamental view for a more volatile year ahead,” Julian Emanuel, who leads the equity, derivatives and quantitative strategy team at Evercore ISI, wrote in a note to clients Thursday evening.
Still, Emanuel, who expects the S&P 500 to end 2025 at 6,800, or about 13% above current levels, argues that a Trump administration will bring a constant seesaw between “risk on” and “risk off” sentiment among investors. .
A cropped photo of President-elect Donald Trump is shown as traders work on the floor of the New York Stock Exchange (NYSE) on January 2, 2025, in New York City. (Timothy A. Clary/AFP via Getty Images) ·Timothy A. Clary via Getty Images
Last week We noticed Hotter than expected December jobs report There has been some debate about whether or not a Fed rate hike will return to the discussion.
December’s lower-than-expected inflation reading eased these concerns. Aditya Bhave, chief US economist at Bank of America Securities, wrote in a note to clients on January 10 that the Fed’s conversation was… “Move towards hiking.”
After the December inflation data was released on January 15, Bhave He told Yahoo Finance The report “downplays the risks of rising interest rates.” However, his team still believes the Fed will remain on hold for the foreseeable future.
Markets will likely get a break from the Fed’s discussion next week as no major economic data is expected and the central bank enters a “blackout period” during which no officials speak publicly before its next policy decision on January 29.
As of Friday afternoon, markets were pricing in between one and two cuts in federal interest rates this year, according to Bloomberg data.
Fourth-quarter earnings season began in earnest last week with reports from the nation’s largest banks. To a large extent, The company’s results were better than expected. FactSet data shows the S&P 500 is now on pace for 12.5% annualized earnings growth this quarter compared to the 11.5% expected last week.
“Although early, it is a great start to a reporting period as we expect a larger-than-average overall win and remain positive on the earnings outlook,” Scott Krohnert, Citi’s U.S. equity strategist, wrote in a note to clients on Friday.
Earnings season will begin this week with 43 S&P 500 companies announcing announcements, led by large-cap tech giant Netflix. But whether or not earnings will truly be the focus in the coming weeks will be tested as political headlines are expected to pile up as Trump is sworn in on Monday.
“We expect the political noise to ramp up next week with the president’s inauguration on Monday and reports of a number of executive orders being planned,” Kronert added. “In the short term, markets will have to contend with increasing uncertainty in fiscal, trade and monetary policies, even if (earnings) reports are strong.”
For now, at least one of the market’s headwinds has subsided. Last week, the 10-year Treasury yield rose (^ TNX), Which was rising and weighing on the stocksIt fell nearly 20 basis points to 4.61%.
Whether or not the conversation about Trump’s policies will cause bond yields to rise again will be the key narrative to watch next week.
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Monday
Markets are closed for Martin Luther King Jr. Day while President Trump will be sworn in.
Tuesday:
Economic data: There are no notable economic data.
Profits: Netflix (NFLX), 3M Company (Mmm), capital (COF), Charles Schwab (SouthwestDr. Horton (DHI), K Corp (key), Interactive Brokers Group (Early), United Airlines (first), Zions Bancorporation (Zion)
Wednesday
Economic data: MBA Mortgage Applications, week ending January 17 (previously +33.3%); Leading Indicator, December (-0.1% expected, +0.3% previously)
Economic data: Initial jobless claims, week ending January 18 (previously 217,000); Kansas City Federal Reserve Bank. Manufacturing activity, January (previously -4);
Profits: American Airlines (the), Alaska Airlines (Alec), CSX Corporation (CSX), Freeport-McMoRan (FCX), GE Aerospace (General Electric), intuitive surgery (ISRG), Texas Instruments (Texan), Union Pacific Company (United National Party)
Economic data: S&P Global US Manufacturing PMI, preliminary reading for January (previously 49.4); S&P Global Services PMI, January preliminary (previously 56.8); US S&P Global Composite PMI, January (previously 55.4); University of Michigan Consumer Confidence Index, January final (previously 73.2); Existing Home Sales, December (1.2% expected, 4.8% previously)
Earnings: American Express (xp), Bank shares for First Citizens (FCNCA), NextEra Energy (Ne), Verizon (VZ)
Josh Schaeffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
