U.S. Equity Markets
On Thursday, U.S. equity markets saw a positive session, with the S&P 500 closing at a new record high. This was driven by optimism following President Donald Trump’s remarks at the World Economic Forum in Davos. Trump called for central banks, including the U.S. Federal Reserve, to lower interest rates, as well as for cheaper oil prices and threats of tariffs on non-domestic goods. These comments led to a boost in market sentiment, particularly in sectors sensitive to economic policy, as all 11 S&P 500 sectors ended in the green.
However, yields on 10-year Treasuries rose to 4.64%, which put some pressure on the Nasdaq, despite the index still being on track for a solid weekly gain.
Corporate Earnings and Key Stock Movements
- GE Aerospace: Shares surged 6.6% after the company forecasted 2025 profits above estimates, supported by progress in resolving supply chain issues and a 15-20% increase in LEAP engine production.
- Electronic Arts: Shares dropped 16.7% following a downgraded forecast for annual bookings.
- American Airlines: Shares fell 8.7% after issuing a 2025 profit warning.
Oil Market Update
WTI oil prices dipped after President Trump urged Saudi Arabia and OPEC to reduce prices. This, combined with concerns over his potential trade tariffs on major economies, raised fears of global trade disruptions and reduced oil demand.
Economic Data
- Initial Jobless Claims: Claims rose slightly from the previous week, though they remain low overall.
Looking ahead, the focus will shift to tech earnings reports and the Fed’s policy meeting, which are expected to set the direction for the markets in the near term.
Global Market Update: Asia, Europe, and Beyond
Asian Markets
Most Asian equity markets rose on Friday, fueled by optimism from Wall Street and China’s additional policy support for local equities. However, Japanese shares pared gains after the Bank of Japan raised interest rates, while Hong Kong’s Hang Seng index led the region with a 1.7% rally, driven by gains in chipmaking equities.
European Markets
European equities rose, with the STOXX 600 climbing 0.4% to 530.34 points, marking its seventh consecutive day of gains. However, technology shares fell 1.5%, led by a 4.4% drop in ASML. Puma slumped 22.8% after disappointing profit results, and Volkswagen and Siemens also saw declines amid broader market weakness.
Currency Market Dynamics
The U.S. dollar dropped below 108 on Friday, set for a 1% decline for the week, following President Trump’s speech on tariffs and interest rates. The euro strengthened to 1.0449, as the dollar weakened against major currencies amid expectations that the Federal Reserve will keep rates steady.
Oil Prices
Oil prices dropped in Asian trade, heading for weekly declines, as President Trump urged for lower crude prices and increased energy production in the U.S. His call for lower oil prices, aimed at tackling U.S. inflation, and concerns over his trade tariffs have raised fears of global trade disruptions and reduced oil demand.
Key Corporate Moves and Earnings Reports
GE Aerospace
- Stock Move: +6.6%
- Reason: Stronger-than-expected 2025 profit forecast, with a $7 billion share buyback and 30% dividend increase. The company also exceeded Q4 earnings expectations.
American Airlines
- Stock Move: -8.7%
- Reason: 2025 profit warning below Wall Street expectations, citing higher costs from recent labor contracts and challenges from jet fuel prices.
Freeport-McMoRan
- Stock Move: Missed revenue expectations.
- Reason: Reported better-than-expected quarterly earnings but weaker-than-expected revenue due to weaker pricing. The company also outlined growth plans for 2025.
Union Pacific
- Stock Move: +7% rise in Q4 profit, driven by higher grain and fertilizer shipments, along with core pricing gains.
Boeing
- Stock Move: Warning of nearly $4 billion loss in Q4, significantly higher than analyst expectations due to production quality issues, a major strike, and a slowdown in jetliner deliveries.
Twilio
- Stock Move: +15% after-hours surge.
- Reason: Positive outlook, with expectations to meet the top of its Q4 earnings guidance and revenue growth of about 11%. The company also announced a $2 billion share buyback program.
Intuitive Surgical
- Stock Move: Fell over 2% in after-hours trading.
- Reason: Despite reporting strong Q4 earnings, the company lowered its 2025 gross profit margin forecast to 67-68%, citing potential impacts from new tariffs.
Texas Instruments
- Stock Move: Missed Q1 earnings expectations.
- Reason: Despite better-than-expected Q4 results, the company gave a soft earnings outlook for the first quarter, which caused a 4.6% drop in shares during after-hours trading.
Upcoming Data and Events
Key economic releases for the day include the S&P Global Composite, Manufacturing, and Services PMI Flash reports in the U.S. Later today, companies reporting earnings include American Express and Verizon.
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