U.S. Market Performance
On Tuesday, U.S. equity markets declined, reversing earlier gains as strong economic data fueled concerns about inflation and the Federal Reserve’s interest rate path. The ISM services PMI for December exceeded expectations at 54.1, reflecting continued strength in the services sector. However, the prices subindex rose to 64.4, a near two-year high, heightening inflationary fears. Job openings in November increased to 8.1 million, indicating persistent strength in the labor market.
These factors drove bond yields higher, with the 10-year Treasury yield nearing 4.7%, which dampened investor sentiment and led to broad declines across major indices. The S&P 500 dropped 1.1%, the Nasdaq fell 1.9%, and the Dow Jones Industrial Average declined by more than 0.4%.
Growth-focused sectors, including technology and consumer discretionary, were the hardest hit. Nvidia shares slid by over 6%, and Tesla dropped by 4% following a downgrade. Defensive sectors, such as healthcare, demonstrated resilience, while energy stocks outperformed as oil prices rose. Micron Technology was a rare bright spot, gaining 2.7% after Nvidia confirmed its role as a memory supplier for the new Blackwell gaming chips.
Global Market Overview
Asia
Asian equity markets were mixed. Chinese shares extended losses after the U.S. blacklisted major firms, while Japanese stocks fell following yen intervention warnings. South Korea and Australia recorded gains, driven by Samsung’s rise and easing inflation concerns.
U.S. Futures and European Markets
U.S. equity futures steadied on Wednesday as investors awaited key economic data, balancing inflation concerns against elevated Treasury yields.
In Europe, markets closed mixed. Germany’s DAX and France’s CAC 40 posted gains, while the UK’s FTSE 100 ended slightly lower. Gains in energy, retail, and industrial sectors offset declines in real estate and construction as investors analyzed inflation data and ECB policy signals.
The dollar index remained firm above 108.5, supported by higher Treasury yields and strong U.S. economic data. The euro fell to 1.0354 as the dollar strengthened, driven by robust services growth and increased job openings.
The 10-year Treasury yield held steady at 4.69%, reflecting an eight-month high. The combination of rising job openings and accelerating services activity has shifted attention to Friday’s jobs report ahead of the Federal Reserve’s next policy decision.
Oil prices climbed on Wednesday as tightening supplies from Russia and OPEC, coupled with solid U.S. economic data, boosted demand outlooks. However, analysts forecast lower average oil prices in 2025 due to non-OPEC supply growth outpacing demand.
Economic Indicators to Watch
- U.S. ISM Non-Manufacturing PMI (December): 54.1
- U.S. Job Openings (November): 8.098 million
- Eurozone Inflation (December): 2.4% – driven by energy and services costs. Inflation is expected to trend toward the ECB’s 2% target later this year.
Despite underlying price pressures, the European Central Bank is likely to continue interest rate cuts, though the pace of easing may slow.
Company Highlights and Stock Movements
Notable Stock Developments
- Samsung Electronics: Q4 operating profit estimates fell short of expectations due to increased R&D costs and slowing demand for memory chips. Despite year-on-year growth, earnings declined from the previous quarter, impacted by delays in supplying high-bandwidth memory chips to Nvidia.
- Meta: Meta scrapped its U.S. fact-checking program and relaxed political content restrictions, emphasizing “free expression” through its new Community Notes system. The decision, influenced by political factors, raised concerns about weakened content moderation and misinformation.
- Toronto-Dominion Bank: Reviewing its 10% stake in Charles Schwab amid a broader strategic review following a U.S. money-laundering investigation. The bank reaffirmed its commitment to U.S. operations while restructuring its balance sheet and enhancing anti-money-laundering protocols.
- Micron Technology: Highlighted as a memory chip supplier for Nvidia’s new GeForce RTX 50 Blackwell GPUs, boosting investor interest. Nvidia continues expanding its influence in AI hardware and gaming technology.
- Microsoft: Announced job cuts across the company but maintained overall headcount through role replacements. The company has reduced its workforce by approximately 14,000 over recent years.
- Flutter: Warned of lower earnings for its U.S. FanDuel brand in 2024 due to significant NFL gambler wins but anticipates stronger performance in other markets, with revenue and adjusted EBITDA expected to exceed prior forecasts.
- Mercedes-Benz: Plans to lower mid-term profitability targets for its passenger car division, citing weak market conditions and the shift to electric vehicles. Revised targets are expected by February 20.
- Goodyear Tire & Rubber Co: Agreed to sell its Dunlop brand to Japan’s Sumitomo Rubber Industries for $701 million as part of restructuring efforts. Goodyear will continue supplying certain Dunlop tires over the next five years.
Analyst Ratings and Forecasts
- Apple: Downgraded to “Sell” by MoffettNathanson, citing legal challenges, weakening performance in China, and disappointing consumer response to AI features. Analysts believe Apple’s stock is overvalued with limited growth potential.
- PepsiCo and Coca-Cola: Rated “Overweight” by Piper Sandler, with price targets of $171 and $74, respectively, highlighting brand strength and growth in emerging markets. Keurig Dr Pepper was rated “Neutral” with a $35 target due to rising coffee bean costs and weak sales momentum.
- Cloudflare: Named Wells Fargo’s top software infrastructure pick for 2025, with growth driven by offerings like SASE, Workers, and Workers AI.
- Carvana: Upgraded to “Outperform” by RBC Capital Markets, with a price target of $280, citing improvements in retail unit sales and balance sheet stability.
Upcoming Economic Data and Events
Key data releases to monitor include:
- Germany’s Retail Sales (November)
- Eurozone Producer Prices (November)
- December Sentiment Surveys
These figures are expected to provide further insight into the region’s economic health and influence market movements.
For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.
