U.S. Market Highlights
U.S. equity markets ended Wednesday’s session significantly higher following a favorable Consumer Price Index (CPI) report, which showed core inflation continuing to moderate. Headline CPI increased by 2.9% year-over-year in December, slightly exceeding expectations due to rising energy prices, while core CPI rose by 3.2%, below the anticipated 3.3%. Bond yields responded sharply, with the 10-year Treasury yield dropping by 0.14 percentage points to 4.65%.
The positive inflation data, combined with robust fourth-quarter earnings from major U.S. banks, fueled a risk-on sentiment. Key U.S. indices posted notable gains:
- S&P 500: +1.8%
- Nasdaq: +2.5%
- Dow Jones: +1.65%, marking its best session since November 11.
Sector Performance
Sector performance was broadly positive:
- Banks surged 3% following strong earnings reports.
- Semiconductor and consumer stocks climbed 2–2.3%.
- Networking stocks rose 1.7%.
Investor sentiment was further buoyed by significant stock buybacks and declining rates, with the U.S. 10-year Treasury yield falling from 4.79% to 4.655%. Expectations for Federal Reserve rate cuts in June and December also gained traction.
However, the Empire State Manufacturing Survey highlighted a decline in economic activity in New York State in January. The general index fell to -12.6, with companies reporting stable employment levels but a shorter average workweek. Input and selling prices accelerated, though businesses remained optimistic about future conditions.
Global Market Overview
Asia: Buoyed by U.S. Data and Rate-Cut Expectations
Asian equities rose on Thursday, supported by softer U.S. inflation data and renewed rate-cut expectations:
- Australia’s S&P/ASX 200 led the region’s gains, bolstered by strong employment data.
- Japan’s Nikkei 225 underperformed due to a stronger yen.
- South Korea’s KOSPI advanced, even as the central bank held rates amid political unrest.
Europe: Inflation Eases, Equities Rally
European equities rose over 1% on Wednesday, driven by the positive U.S. inflation report, which increased expectations for a Federal Reserve rate cut. The pan-European STOXX 600 gained 1.3%, led by real estate and financial stocks. UK equities outperformed after British inflation unexpectedly slowed.
U.S. Dollar and Oil Prices
The U.S. Dollar Index hovered near the 109 level on Thursday morning, softened by cooling inflation data and expectations of Federal Reserve rate cuts. However, concerns over President Trump’s policy plans limited the dollar’s decline, with the euro trading at 1.0284 against the dollar.
Oil prices rose for the second consecutive session, supported by U.S. sanctions on Russia and a larger-than-expected drop in U.S. crude inventories. Gains were partially capped by a deal between Israel and Hamas to halt fighting in Gaza and exchange hostages.
U.S. Inflation Update
In December, headline CPI rose by 0.4% month-over-month and 2.9% annually, driven largely by energy costs. Core CPI increased by 0.2% month-over-month and 3.2% annually, falling short of expectations. Alongside soft producer price inflation data, this reflects a continued disinflationary trend, with further moderation anticipated in 2025.
Corporate Earnings
Goldman Sachs
- Earnings per share (EPS): $11.95, far surpassing the consensus of $8.21.
- Revenue increased 23% year-over-year to $13.87 billion, exceeding the $12.36 billion estimate.
- Growth was driven by record net revenue in equities trading and a rise in investment banking fees. Goldman also noted an increase in completed M&A transactions.
JPMorgan Chase
- EPS: $4.81, above the consensus of $4.09.
- Revenue climbed 11% year-over-year to $42.8 billion, beating the consensus estimate of $41.9 billion.
- CEO Jamie Dimon highlighted strong performance across all business lines, with investment banking fees up 49% and market revenue growing 21%.
Wells Fargo
- EPS: $1.43, exceeding the consensus of $1.35.
- Revenue declined 0.5% year-over-year to $20.38 billion, below the $20.58 billion estimate.
- Net interest income fell, but noninterest income rose 11%, driven by better venture capital investment results and higher fees in the wealth and investment management segment. Wells Fargo provided guidance for 1–3% net interest income growth in 2025.
Citigroup
- EPS: $1.34, beating the consensus of $1.22.
- Quarterly revenue was $19.6 billion, up 12% year-over-year and above the $19.49 billion estimate.
- The bank highlighted record performance in services, wealth, and U.S. personal banking. Quarterly net income stood at $2.9 billion, compared to a net loss in the same quarter last year.
BlackRock
- Posted 23% quarterly revenue growth and an increase in adjusted net income year-over-year.
- Total assets under management reached nearly $11.6 trillion by year-end, driven by flows into its Bitcoin ETF.
Apple
Apple fell behind Vivo and Huawei as China’s top smartphone sellers in 2024, with shipments declining by 17%, marking its worst-ever annual performance in the country. The decline was attributed to the lack of artificial intelligence features in its latest iPhones and growing competition from domestic brands.
FTAI Aviation
Muddy Waters Research alleged that FTAI misrepresented revenue by classifying engine sales as maintenance income, leading to a 24% drop in the stock price.
Upcoming Data and Events
Key events to watch today include:
- December retail sales data, providing insights into consumer spending.
- Earnings reports from major companies such as Morgan Stanley, UnitedHealth, Taiwan Semiconductor, and Bank of America.
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