Market Performance Overview
U.S. equity markets ended Thursday on a positive note, supported by strong Q4 GDP data and upbeat corporate earnings. The S&P 500, Dow, and Nasdaq all posted modest gains, showing resilience despite market concerns earlier in the week.
Technology stocks were a mixed bag: Microsoft shares dropped by 6%, weighing down the sector, while Apple’s after-hours trading saw a 3% jump following better-than-expected quarterly results. Other tech companies like Intel and KLA Corporation also performed well, rising 4% and 3%, respectively.
Despite worries over an AI-related selloff earlier, the broader market showed strength, with the Dow up 5.5% for the month, while the S&P 500 and Nasdaq posted gains of 3.2% and 1.9%, respectively.
Economic Data: A Mixed Outlook
The latest economic data presents a mixed picture:
- U.S. GDP: The U.S. economy grew at a 2.3% annual rate in Q4 2024, slightly below expectations but still signaling solid growth, primarily driven by strong consumer spending.
- Labor Market: Remains robust.
- Inflation: Signs of acceleration in inflationary pressures.
- Pending Home Sales: Unexpectedly fell, suggesting a cooling housing market.
The Federal Reserve maintained its cautious stance, keeping interest rates unchanged. Meanwhile, commodity markets showed gains, with both gold and silver prices rising sharply. Investors are now focusing on upcoming earnings reports and inflation data, particularly the PCE price index due for release on Friday.
Global Market Update: Asian Markets Mixed
Asian Markets Show Caution
On Friday, Asian stocks were mixed, with investor caution amid President Trump’s threat of 100% tariffs on the BRICS bloc and ongoing trade uncertainties. Japan’s market showed slight gains, and Singapore’s Straits Times index rallied, while markets in India and South Korea faced pressure from concerns over tariffs and declines in technology stocks.
U.S. Market Outlook: Focus on Inflation Data and Earnings
U.S. equity markets are expected to open on a positive note, building on Thursday’s gains. Investors are digesting mixed economic data and corporate earnings. The focus remains on upcoming inflation data and earnings reports, with particular attention on the tech sector following strong results from Apple and other key firms.
European Market Update
STOXX Indices Rise
The STOXX 50 and STOXX 600 indices rose by 1% and 0.9%, respectively, on Thursday. This followed the European Central Bank’s expected rate cut, despite weak Eurozone data.
Corporate Moves in Europe
- Shell: Gained 1.2% after an earnings miss.
- Deutsche Bank: Dropped by over 4%, following disappointing results.
- H&M: Fell 4.1% after disappointing results.
Currency & Commodity Market Insights
U.S. Dollar Remains Strong
The U.S. dollar held steady above 108, extending its gains for the third consecutive session. Against the euro, the dollar was trading at 1.0390, reflecting strength amid solid U.S. economic data and a cautious Fed stance.
Oil Prices and Trade Concerns
Oil prices rose slightly in Asian trade on Friday but remained on track for a second consecutive week of losses. These losses were driven by concerns over U.S. trade tariffs and global demand. Traders are also awaiting the U.S. PCE inflation data, which may provide more clarity on interest rate decisions, while President Trump’s tariff threats on Canada, Mexico, and China add further uncertainty to the market.
Key Earnings and Company Updates
Apple and Tech Earnings
- Apple: Expected strong sales growth in the current quarter. While iPhone sales for the quarter ending December 28th were slightly below expectations, Apple anticipates a rebound in the upcoming quarter, forecasting growth in the low- to mid-single digits.
- Samsung Electronics: Warned of sluggish sales in its AI chip division due to U.S. export restrictions on high-bandwidth memory chips to China and challenges in meeting Nvidia’s chip requirements. The company expects limited first-quarter earnings growth.
Visa and Mastercard Earnings Beat Expectations
- Visa Inc.: Exceeded expectations for Q1, reporting earnings of $2.75 per share and revenue of $9.51 billion, driven by strong payment volumes and a surge in cross-border transactions. The company provided an optimistic revenue outlook, forecasting net revenue growth in the low double digits and EPS growth in the low-teens percentage range.
- Mastercard: Exceeded fourth-quarter expectations, driven by strong consumer spending and a 20% increase in cross-border volume. The company posted adjusted earnings of $3.82 per share and a 16% rise in net revenue to $7.49 billion.
Other Key Corporate Updates
- KLA Corporation: Reported strong fiscal Q2 results, with earnings per share of $8.20 and revenue of $3.08 billion, surpassing analyst expectations.
- Intel: Exceeded expectations in Q4, but its revenue forecast for the current quarter fell short due to weak demand for data center chips and uncertainty surrounding its CEO transition.
- Baker Hughes: Surpassed Wall Street’s profit expectations for Q4, driven by strong demand for natural gas equipment, despite weaker sales in its drilling segment.
- Caterpillar: Reported fourth-quarter earnings that exceeded expectations but with a revenue shortfall due to lower sales volumes and a decrease in dealer inventory.
Upcoming Data and Events to Watch
Markets will focus on the release of the Core PCE Price Index, a key inflation measure, which could significantly influence investor sentiment. Major earnings reports from companies such as AbbVie, Exxon Mobil, Chevron, Novartis, and Colgate-Palmolive are expected today, offering insights into sectors like pharmaceuticals, energy, and consumer goods.
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