Stocks extend January pivot

01/27/25
  • S&P 500 rallies to new all-time highs
  • Energy sector surrenders gains as oil slides
  • This week: megatech earnings, Fed rate decision

Less than two weeks after falling to a nine-week low, the S&P 500 (SPX) finds itself back in record territory as traders get ready for a key week of earnings and economic data.

Last week the SPX not only hit new all-time highs, it notched its biggest two-week gain (4.7%) since September, even though each of the weeks contained only four trading days:

Chart 1: S&P 500 (SPX), 12/6/24–1/26/25. S&P 500 (SPX) price chart.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)


The headline: New milestones for the S&P 500.

The fine print: With the market-based odds of the Fed leaving rates unchanged on Wednesday slightly above 99%, it’s not much of a stretch to say that this week’s tone could be set by megacap tech earnings. Apple (AAPL), Meta (META), Microsoft, and Tesla (TSLA) are all scheduled to release their numbers.

The scorecard: The Dow Jones Industrial Average (DJIA) was the biggest gainer last week:

US index returns for week ending January 24, 2025.

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)


Sector returns: The strongest S&P 500 sectors last week were communication services (+4%), health care (+2.9%), and industrials (+2.4%). The weakest sectors were energy (-2.9%), materials (+0.7%), and consumer discretionary (+0.8%).

Stock movers: Redwire Corporation Com (RDW) +51% to $22.33, and Tempus AI (TEM) +36% to $47.64, both on Tuesday. On the downside, FTAI Aviation (FTAI) -25% to $83.79 on Tuesday, Agilysys (AGYS) -20% to $100.67 on Wednesday.

Yields: The benchmark 10-year Treasury climbed 0.01% to 4.63% last week.

Futures: WTI crude oil (CLH5) ended the week down $2.73 to $74.66. The White House urged OPEC to lower oil prices while announcing its intention to boost US oil production.1 February gold (GCG5) closed Friday at $2,778.90, up $30.20 for the week. Biggest gainers: May cocoa (CCK5) +13%, March coffee (KCH5) +6.2%. Biggest decliners: March natural gas (NGH5) -7.7%, March lumber (LBSH5) -5.8%.

Coming this week

Megacap names Apple (AAPL), Meta (META), and Tesla (TSLA) highlight this week’s earnings lineup, but a wide range of high-profile pharma, defense, consumer, energy, and tech names are on the calendar. Here’s a sample:

Monday: On Semiconductor (ON), Sofi Technologies (SOFI), AT&T (T), Cleveland-Cliffs (CLF), Polaris (PII)
Tuesday: Boeing (BA), General Motors (GM), Kimberly-Clark (KMB), Lockheed Martin (LMT), F5 (FFIV), Logitech (LOGI), Stride (LRN), Powell Industries (POWL), Qorvo (QRVO), Starbucks (SBUX), Stryker (SYK)
Wednesday: Automatic Data Processing (ADP), ASML (ASML), Danaher Corporation (DHR), Eagle Materials (EXP), General Dynamic (GD), Lennox (LII), Otis Worldwide (OTIS), T-Mobile (TMUS), International Business Machines (IBM), Lam Research (LRCX), Meta (META), Microsoft (MSFT), Tesla (TSLA), Whirlpool (WHR)
Thursday: Allegro Microsystems (ALGM), Caterpillar (CAT), Southwest Airlines (LUV), Mastercard (MA), Murphy Oil (MUR), Northrop Grumman (NOC), Pulte Group (PHM), Sherwin Williams (SHW), United Parcel Service (UPS), Apple (AAPL), Intel (INTC), Atlassian (TEAM), Visa (V )
Friday: AbbVie (ABBV), Aon (AON), Colgate Palmolive (CL), Chevron (CVX), Novartis AG (NVS), Phillips 66 (PSX), Exxon Mobil (XOM)

The first estimate of Q4 GDP and Fed inflation (PCE Price Index) are this week’s biggest numbers:

Monday: Chicago Fed National Activity Index, New Home Sales
Tuesday: Durable Goods Orders, S&P Case-Shiller Home Price Index, FHFA House Price Index, Consumer Confidence
Wednesday: Trade Balance in Goods, retail and wholesale inventories, Fed interest rate decision
Thursday: GDP (Q4, initial estimate)
Friday: Personal Income and Spending, PCE Price Index

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Policy-driven market volatility?

In the wake of President Trump’s inauguration last week—accompanied by a flurry of executive orders and policy announcements—Morgan Stanley & Co. analysts discussed the potential for trade policy uncertainty to drive volatility in the financial markets.2

As the analysts explain, the president and his political allies’ public speculation on trade policy, including the broad application of tariffs, made a wide range of outcomes seem plausible. While new tariffs were not immediately implemented, the president appeared to be maximizing his options in terms of levying tariffs when and how he wants.

The strategists note this means all public comments about tariffs must be taken seriously, even if they don’t become realities (which the strategists expect will be the case for those threatened against Mexico and Canada). Bottom line, because the US public policy path will have “substantial effects on the outlook for the global economy and markets,” uncertainty about that path could contribute to market volatility.

 

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1 Reuters. Oil set for weekly decline as investors weigh Trump energy policies. 1/24/25
2 MorganStanley.com. Potential Economic Consequences of Trump’s Executive Orders. 1/22/25.

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