S&P futures are up 0.4% in Friday premarket trading, building on a week of healthy gains, particularly for the equal-weight S&P. European markets are higher, and Asia saw mostly positive sessions. Treasuries are slightly firmer with curve flattening. The dollar index is up 0.1%, gold is down 0.7%, and WTI crude is up 0.6%.
A decline in Treasury yields this week, supported by cooler core CPI/PPI data and dovish Fedspeak, has bolstered risk assets. Early Q4 earnings, especially from banks with strong 2025 NII guidance, have been well received. Optimism around Trump 2.0 policies remains, but uncertainty lingers about forthcoming measures, some of which may start rolling out through executive orders next week. A ceasefire between Israel and Hamas is still expected to begin Sunday.
Economic Calendar Today features December housing starts and industrial production. The Fed enters its blackout period ahead of the Jan. 29 FOMC meeting. Cleveland Fed President Hammack noted inflation remains a concern in an overnight interview.
Corporate Updates
- Earnings: SLB-US and FAST-US set to report this morning. JBHT-US posted better-than-expected Q4 results but issued weaker Q1 guidance.
- M&A: Investors digest the potential Rio Tinto (RIO-US) and Glencore (GLEN.LN) merger, which would be a record-setting mining deal.
- TikTok: US officials signal support for keeping TikTok operational until a sale of US operations can be finalized.
US equities ended mostly lower on Thursday, with the S&P 500 down 0.21%, Nasdaq falling 0.89%, and the Dow slightly down by 0.16%. However, breadth was positive as the equal-weighted S&P outpaced the cap-weighted index by approximately 100 basis points. Treasuries were firmer, marking the second straight session of yield declines following Tuesday’s high of 5% on the 30-year yield. The dollar index fell 0.1%, while the yen strengthened on expectations of a Bank of Japan rate hike. Gold gained 1.2%, and Bitcoin futures rose 0.8%, breaking above $100,000. WTI crude ended down 1.1% after two days of gains.
Markets reacted to a barrage of economic data, including softer headline retail sales, stronger control group sales, a sharp rise in the Philly Fed manufacturing index, higher initial claims, and unexpected increases in import and export prices. Sentiment was supported by Wednesday’s cooler CPI print and dovish comments from Fed Governor Waller, who hinted at the possibility of a March rate cut. However, earnings reports presented a mixed picture, with big banks under pressure. Uncertainty surrounding Trump’s 2.0 policy agenda, including tariff and tax plans, remains a headwind for risk sentiment.
Economic Data Highlights
- Retail Sales: Headline retail sales rose 0.4% m/m in December, below consensus, while control-group sales were stronger at 0.7% m/m (vs. 0.4% expected).
- Initial Claims: Weekly jobless claims increased to 217K (vs. 203K prior and 215K expected). Continuing claims unexpectedly dropped.
- Philadelphia Fed Index: January manufacturing index surged to +44.3 from -10.9 prior, marking the highest level for new orders since November 2021.
- Other Indicators: December import and export prices rose, contrary to expectations for declines. NAHB homebuilder sentiment beat consensus.
News by GICS Sector
Information Technology
- TSM-US (Taiwan Semiconductor): Gained 3.9% after beating Q4 profitability estimates and guiding Q1 and FY25 revenue above expectations. AI-related revenue is expected to double this year.
- DOCN-US (DigitalOcean): Rose 3%, upgraded to overweight at Morgan Stanley on improved growth prospects and unit economics.
- SNAP-US (Snap): Fell 5.2% on reports that the Biden administration is exploring ways to keep TikTok operational in the US.
Healthcare
- UNH-US (UnitedHealth Group): Declined 6% despite a Q4 EPS beat as revenue missed expectations. Medical cost ratio (MCR) and Optum Health margins came in below estimates.
- MYGN-US (Myriad Genetics): Dropped 4.8% after preannouncing Q4 revenue below consensus and issuing FY25 guidance that reflected coverage headwinds for GeneSight from UnitedHealth.
- CRL-US (Charles River Laboratories): Fell 4.7% after a report from CITES recommended ending non-human primate shipments from Cambodia, citing ongoing controversy.
Financials
- MS-US (Morgan Stanley): Up 4%, supported by a strong Q4 revenue and EPS beat. Equities trading and deposit trends were standouts, while investment banking was a minor drag.
- PNC-US (PNC Financial Services): Down 2%, with Q4 earnings and revenue better than expected but weighed down by weaker Q1 guidance for net interest income (NII) and loans.
- USB-US (US Bancorp): Dropped 5.6%, as Q4 revenue and fee income fell short of expectations, while expenses ran ahead of consensus.
Consumer Discretionary
- TGT-US (Target): Declined 1% despite raising Q4 comp guidance to ~1.5%. However, only reiterating Q4 EPS guidance disappointed investors.
- SEZL-US (Sezzle): Rose 1.1% after announcing it expects 2024 revenue and EPS to beat prior guidance, citing exceptional holiday demand.
- RIVN-US (Rivian): Gained 3.6%, with reports that the US government is finalizing loan guarantees for the company and Plug Power.
- LTH-US (Life Time Group): Gained 6.2% on better-than-expected preliminary Q4 earnings, citing record member engagement and retention
Industrials
- UPS-US (United Parcel Service): Up 1.9%, upgraded to buy at BofA, citing potential cycle inflection and cost savings initiatives.
- FUL-US (H.B. Fuller): Fell 3% after missing Q4 EPS estimates. Margins declined y/y, and FY25 guidance midpoint was below Street estimates.
Eco Data Releases | Friday January 17, 2025
S&P 500 Constituent Earnings Announcements | Friday January 17, 2025
Data sourced from FactSet Research Systems Inc.
