US equities slightly lower in premarket trading following Thursday’s gains, where the S&P 500 hit its first ATH since December. Stocks are on track for a second consecutive week of strong gains. Asian markets mostly higher, led by Greater China, Australia, and South Korea, while Japan lagged. European markets up ~0.8%. Treasuries firmer with curve steepening. Dollar index down 0.5%. Gold up 0.6%. Bitcoin futures up 2%. WTI crude up 0.4%.
Key focus is on next week, with ~40% of S&P 500 market cap set to report earnings, including major tech names (MSFT, META, AAPL, AMZN). BoJ tightened by 25 bp as expected. Eurozone flash composite PMI unexpectedly moved into expansion for January, though manufacturing remains in contraction. Q4 earnings reports so far have been mixed, with some firms citing headwinds into 2025.
Notable Earnings Updates:
- TXN: Q4 beat on revenue, cited China strength, but Q1 EPS guidance missed on softer GMs. Industrial segments remain weak.
- ISRG: Q4 EPS beat expectations; reaffirmed 2025 guidance, but GM guidance and valuation concerns linger.
- BA: Negative Q4 preannouncement due to strike impacts, government project losses, and layoff costs.
- CSX: Missed on Q4 OR, flagged H1 2025 headwinds.
- TWLO: Up sharply on a positive Q4 preannouncement and improved 2025 outlook from its Investor Day.
- DDD: Higher after announcing collaboration with Daimler
US equities advanced in Thursday trading (Dow +0.92%, S&P 500 +0.53%, Nasdaq +0.22%, Russell 2000 +0.47%), with the S&P 500 closing at a fresh ATH above 6100, the first since early December. Breadth was positive, recovering from yesterday’s dip. Outperformers included rails (UNP), trucking (KNX), refiners, ag chemicals, managed care, pharma, credit cards, payments, asset managers, apparel, cruise lines, HPCs, media, and solar. Big tech was mixed, with semis giving back some gains, partly due to SK Hynix guidance. Laggards included airlines, regional banks, video games, P&C insurance, oil services, E&Cs, homebuilders, beverages, and China tech.
Treasuries were mostly weaker, with curve steepening. The dollar index fell 0.1%, weaker on major crosses. Gold slipped 0.2%. Bitcoin futures gained 0.2%. WTI crude declined 1.1%, pressured by Trump’s call on OPEC+ to lower prices.
Market sentiment remained calm amid post-inauguration headline flow. Trump reiterated his focus on tax cuts and lower interest rates at Davos but avoided significant tariff updates, leaving policy uncertainty intact. Politico reported on bipartisan debt-and-funding deal talks. Investors continue to focus on near-term reopening of the buyback window, late-January seasonality, and earnings season strength.
Weekly jobless claims slightly exceeded consensus, and continuing claims rose w/w. Friday’s economic releases include S&P US flash PMIs, January University of Michigan consumer sentiment, inflation expectations, and December existing home sales. The Fed remains in its blackout period ahead of the January FOMC meeting, where rates are expected to hold at 4.25-4.50%.
Company-Specific News by GICS Sector
Industrials
- GE (+6.6%): Q4 results beat expectations on all metrics, driven by strong performance in the aerospace segment. Management highlighted robust order growth.
- UNP (+5.2%): Q4 EPS and operating income beat, though revenue missed. Operating ratio improved 220 bp q/q. Management highlighted efficiency gains and FY25 EPS guidance in line with market expectations.
- KNX (+4.7%): Q4 beat expectations, driven by strong TL performance and better OR. Management flagged soft LTL conditions and a gradual recovery in 2025, with more constructive expectations for 2026.
Consumer Discretionary
- HZO (+15.9%): FQ1 EPS exceeded estimates despite lighter revenue, citing headwinds from hurricanes. Reaffirmed FY25 guidance, highlighting strong early activity at retail boat shows.
- EA (-16.7%): Lowered FY25 bookings guidance, citing a slowdown in Global Football momentum and projecting a mid-single-digit decline in net bookings.
- AAL (-3.7%): Provided weaker-than-expected guidance for Q1, citing soft demand trends.
Financials
- DFS (+4.7%): Q4 EPS beat on stronger NIM, NII, and lower provisions. Analysts highlighted improving credit conditions and volume trends.
- TFIN (-14.3%): Missed Q4 earnings due to lower NII/NIM, reduced lending fees, and higher expenses. Management remains cautious on the freight market and expects further cost pressures.
Energy
- KMI (+2.4%): Q4 slightly light, but the company emphasized its leverage to accelerated energy infrastructure projects under Trump 2.0.
Health Care
- ELV (+2.8%): Q4 earnings and revenue beat, driven by lower MLR and premium yield growth. Management raised FY25 revenue guidance and the quarterly dividend.
- MKC (+2.1%): Q4 EPS beat, with strong growth in consumer and flavor solutions segments. FY25 guidance was slightly light, but analysts noted better-than-peer positioning despite FX headwinds.
Information Technology
- PLXS (-10.1%): Q1 earnings beat, but revenue and Q2 guidance missed expectations. Management cited demand softness in healthcare and aerospace industries.
- PSN (-10.1%): Downgraded to market perform due to potential risks surrounding a significant US State Department contract.
Materials
- FCX (-1.5%): Copper volumes for 2025 expected to be below consensus, despite a Q4 EPS beat. Capex was higher than expected, offsetting stronger cash flow.
- AA (-3.7%): Q4 EPS and revenue beat. Alumina production is expected to decline y/y due to refinery curtailments, though Aluminum production is expected to rise. Management noted potential impacts of US tariffs on trade flows.
- SLG (+0.9%): FFO beat with improved leasing performance, signaling strength in key markets.
Eco Data Releases | Friday January 24, 2025
S&P 500 Constituent Earnings Announcements | Friday January 24, 2025
Data sourced from FactSet Research Systems Inc.
