Market Review: January 21, 2025

Closing Recap

Tuesday, January 21, 2025

Index

Up/Down

%

Last

DJ Industrials

538.22

1.24%

44,026

S&P 500

52.62

0.88%

6,049

Nasdaq

126.58

0.64%

19,756

Russell 2000

42.09

1.85%

2,317

 

 

 

 

 

 

 

 

 

U.S. stocks climbed on Tuesday alongside bonds, as markets focused on prospects President Donald Trump’s policies will boost the outlook for the U.S. economy. Treasury yields approached their lowest levels of the year (10-yr as low as 4.53% from recent highs above 4.8%), unwinding a recent surge driven in part by inflation concerns on tariff fears. The dollar gained early (before falling), especially vs. Canada’s Loonie and Mexico’s peso after Trump reaffirmed his intention to impose tariffs of up to 25% on goods from Mexico and Canada starting Feb 1st (but held off for now). Smallcaps outperformed as the Russell 2000 led Wall Street with more than 1.85% gains while breadth was strong at more than 3:1 advancers leading decliners as all S&P sectors outside of energy finished higher. The Dow Jones Industrial Average climbed 1% despite a 4% drop in Apple (AAPL), led by MMM after results and guidance boosted shares.

 

The AI/Nuclear Power/Data Center related stock plays saw a pop higher early afternoon after CBS news reported President Donald Trump is due to announce private sector investment to build artificial intelligence infrastructure in the United States totaling billions of dollars. OpenAI, SoftBank (SFTBY) and ORCL are planning a joint venture called Stargate, the report added, saying SoftBank CEO Masayoshi Son, OpenAI’s Sam Altman and Oracle’s Larry Ellison are due at the White House later on Tuesday. That news boosted those shares, as well as data center plays (DELL, VRT), semi-AI plays (NVDA, ARM, AVGO) as well as nuclear power names (VST, CEG, TLN) on need for more power to boost AI development. Outside of AI, tech saw a boost in GOOGL, NFLX (ahead of earnings tonight) and semiconductors while AAPL was a notable decliner following several cautious analyst comments, including two downgrades (Loop, Jefferies).

 

Stocks overall built on big gains last week, where the S&P 500 Index staged a 2.9% gain, its biggest rally in ten weeks and closed on Friday as its highest close in 2025 to date. Of particular note was the broadening under the surface of the rally, with the Equal Weight S&P 500 outperforming the market-cap weighted SPX by 100 basis points, the largest weekly outperformance since the first week of September. An interesting stat today comes from Ryan Detrick on market breadth who tweets: “Today will be the 6th consecutive day with more than 68% of S&P 500 components higher. That is the longest streak ever.” One of the big non-stock stories was the winter blast covering the South with Texas, Louisiana, Florida, Georgia and the Carolinas dealing with heavy snow, ice and wind gusts to a region where flurries are unusual, while much of the United States remained in a dangerous deep freeze.

Commodities

  • Oil prices fell on Tuesday as WTI crude dropped -$1.99 or 2.56% to settle at $75.89 per barrel as investors assessed U.S. President Donald Trump’s plans to apply new tariffs later than expected while boosting oil and gas production in the United States. President Donald Trump launched a sweeping overhaul of US energy policy hours after taking office on Monday, putting the weight of the federal government behind fossil-fuel production and pulling back from the fight against climate change. Gold prices surge to a two-month high amidst market volatility after slipping initially after President Trump decided against immediate tariffs. February gold ended higher by $10.50 to settle at $2,759.20 an ounce (off lows $2,715.60).

Currencies & Treasuries

  • In currencies, the U.S. dollar bounced vs. the Mexican peso and Canadian dollar early after US President Trump threatened both countries with tariffs on his first day in office, but the dollar overall (DXY) pushed lower all afternoon, down -1.2% to around 108 adding to last week’s declines. Bitcoin was volatile this weekend into today, rising above $109,000 to new record highs on Sunday, but fell below $103,000 this morning after the U.S. president’s first set of policies following his inauguration made no reference to the asset class. Prices did bounce back above $107,000 this afternoon as prices remained volatile. Bitcoin ended last week +9.9% to $104,160, with most of the weekly gains coming towards the end of the week into the inauguration.
  • Treasuries rallied, sending yields to their lowest of 2025 (10-yr hit 4.53% after highs above 4.8% over a week ago) as fears that Trump’s policies will fuel inflation eased with no executive tariff orders yesterday. U.S. Treasury yields on most maturities fell after President Donald Trump refrained from imposing tariffs on his first day in office, although he said imports from Canada and Mexico may get some duties on Feb. 1. U.S. yields, from two-year notes to 30-year bonds, slid to their lowest since early January.

 

Macro

Up/Down

Last

WTI Crude

-1.99

75.89

Brent

-0.86

79.29

Gold

10.50

2,759.20

EUR/USD

0.0019

1.0433

JPY/USD

-0.13

155.46

10-Year Note

-0.037

4.573%

 

Sector News Breakdown

Retail, Consumer Staples & Restaurants:

  • In Food: Hong Kong-based WH Group, the world’s largest pork producer, said it is spinning off Smithfield and listing its shares in the United States under the symbol “SFD” as the companies are offering 17.4 million shares each priced between $23 and $27 each to raise up to $939.6 million. MDLZ was downgraded to Hold from Buy at Jefferies and cut tgt to $62 from $75 saying their work and knowledge base on cocoa makes them more cautious on MDLZ than we were in ’24, given higher likelihood of structural supply issues (also underperform on HSY).
  • In Sports/Apparel Retailers: Morgan Stanley with a slew of changes as URBN was upgraded to overweight from equal-weight (tgt to $63 from $41) to reflect incremental profitability expansion confidence, & what it sees as positive EPS revision & valuation re-rating potential in ’25e; AEO was upgraded to EW from UW with $16 tgt as a function of the drivers of its Underweight thesis playing out & being appreciated in the stock’s -30% Oct TD move; ROST downgraded to EW from UW as only downgrade in changes today on stretched valuation and resumed coverage on TPR with an Equal Weight and $65 tgt saying cheap valuation is balanced by seemingly full out-year estimates. GAP was upgraded to Buy at Argus saying the company’s turnaround is gaining momentum. NKE, UA got a bounce midday after better Adidas (ADDYY) results in Europe (sales EU5.97B vs. est. EU5.34B).
  • In Hardline/Broadline Retail: Morgan Stanley with another batch of changes as they upgraded ULTA to Overweight and $500 tgt saying it remains a strong, durable business in a dynamic and attractive category while prefer RH and DKS. The firm also remains OW rated on COST, WMT, HD and LOW as they benefit, too, plus housing turnover is at a cyclical trough; they upgraded ORLY as a sector leader in auto retail. Lastly, VVV was downgraded to EW from OW and lower tgt to $38 from $42 and lower ests based on relative risk/reward.
  • In Restaurants: Morgan Stanley with several changes as they upgraded WING to Overweight with $389 tgt saying slowing comps are a near term reality to deal with, but the firm looks beyond that and see other KPIs running better than Street in 25; they also see CMG, CAVA and SHAK as best positioned to beat earnings this year, the first two more top line driven, the latter margin driven. The firm also upgraded TXRH to OW, $213 PT, saying they are a bit more positive on full service than usual, and remain Overweight DRI while remain Underweight on CAKE as the stock has held up but margin benefits likely fade, and comps remain relatively modest. In traditional, the firm downgraded YUM to EW and cut WEN to Underweight while remains Overweight MCD and DPZ.

Homebuilders, Building Products, Home Furnishing:

  • In Homebuilders: DHI reported Q1 EPS $2.61 vs. est. $2.37; Q1 revs $7.6B vs. est. $7.08B; Q1 cancellation rate (cancelled sales orders divided by gross sales orders) for the first quarter of fiscal 2025 was 18% compared to 19% in the prior year quarter. LEN shares slipped ahead of spin-off of Millrose. Recall on 1/10, the Co noted Lennar expects to distribute to its stockholders one share of Millrose Class A or Class B common stock for each two shares of Lennar Class A or Class B common stock held of record at the close of business on January 21, 2025.
  • In Home Appliances: South Korea’s Samsung Electronics and LG Electronics are considering moving some manufacturing of home appliances from their Mexican plants to their U.S. plants, a South Korean newspaper reported on Tuesday. The review comes as U.S. President Donald Trump said he was considering imposing 25% duties on imports from Canada and Mexico on Feb. 1.

Leisure, Gaming & Lodging:

  • In Autos: GM was upgraded to Buy from Hold at Deutsche Bank saying they see the company reporting to the high-end of its guidance range in the fourth quarter. President Donald Trump ordered his administration to consider eliminating subsidies and other policies that favor electric vehicles (TSLA, RIVN, LCID), laying the groundwork for moves that risk slowing adoption of cleaner cars in the U.S. In auto suppliers, GOEV shares tumble as filed for bankruptcy under Chapter 7 and will be liquidating its assets.
  • In Leisure Products: PII was downgraded to EW from OW at Morgan Stanley (tgt to $60 from $81) and HOG also downgraded to EW from OW (tgt to $33 from $40 absent conviction in a near-term demand inflection. The firm said Powersports affordability improved HSD% in 2024, and if the firms’ economists are correct, it should continue to improve in 2025. However, even after the expected improvement, prices will remain elevated, an important consideration for a highly discretionary purchase.
  • In Casino & Gaming: JMP Securities says FanDuel (FLUT) gains; DKNG loses QoQ. Handle increased 11% across the states that have reported December data; 4Q24 increased 29%, compared to +55% in 3Q24. The well-understood, historically bad December resulted in industry gaming margins down 382 bps YoY. FanDuel was the largest share gainer in 4Q, +190 bps QoQ, despite reporting a $370M revenue headwind in 4Q stemming from the poor results. Fanatics continues to build market share, up 103 bps QoQ, while DraftKings lost the most share, down 160 bps QoQ. They estimate DKNG will report a -$110M EBITDA impact from bad outcomes in the back half of the quarter.

Energy

  • Energy stocks lagged along with oil prices after President Trump announced plans to apply new tariffs later than expected while boosting oil and gas production in the United States; shares of major oils, equipment, services, refiners and other sub sectors saw weakness. Nuclear stocks CEG, VST, OKLO, NRG, TLN shares jumped after CBS News reported President Trump is poised to unveil a massive investment plan involving billions from the private sector aimed at enhancing AI infrastructure across the United States (raising hopes for nuclear names as AI build out would need more power/energy).
  • Wind, Alt Energy: Shares of Europe’s wind-energy industry, Orsted (DOGEF) shares fell after saying it would take an impairment charge worth roughly $1.68 billion at its troubled U.S. business and said it cut its valuation for leases off the coasts of New Jersey, Maryland and Delaware. It also cited delays and higher costs at its Sunrise Wind project off New York. President Trump also targeted the wind turbine sector on day one of his presidency, with an executive order halting federal leases and permits for offshore and onshore wind farms.
  • Utilities: Evercore/ISI upgraded shares of AEE (tgt to $104 from $89), EXC (tgt to $44 from $43), OGE (tgt to $47 from $41), and NRG (tgt to $126 from $74) all to Outperform from In-line as they maintain a positive outlook for the power and utilities group, saying improving fundamentals and a favorable valuation backdrop should support outperformance through the first half of 2025. Factors such as inflation moderating, potential future interest rate cuts, and rising electricity demand are expected to act as tailwinds.

Financials

  • In Banks/Brokers: KEY shares reversed lower after Q4 results beat (adjusted EPS $0.38 vs. est. $0.32) and said net interest income was up 10% quarter-over-quarter and adjusted fees were up meaningfully versus comparable periods but only reiterates its forecast for interest income to jump 20% this year from 2024 level of $3.81B; FITB Q4 EPS $0.85 vs. est. $0.88 and Net Interest Margin $2.97 from $2.90 at Q3, capital markets fees jumped 16% to $123M y/y, while its wealth and asset management revenue rose 11% to $163M and AUM +17% y/y to $69 billion; SCHW shares jump following better Q4 results posting a 44% rise in Q4 adjusted profit, helped by rise in asset management fees as EPS of $1.01 topped $0.91 consensus; ONB hit 16-year highs after earnings.
  • In REITs: Prison Operators GEO and CXW shares active after President Donald Trump signed orders declaring illegal immigration at the U.S.-Mexico border a national emergency and targeting automatic citizenship for U.S.-born children of immigrants in the country illegally. Deutsche Bank downgraded shares of single family for rent REITs and upgrading manufactured housing, and remaining selective in multifamily; AMH, INVH both downgraded from buy to hold and ELS, ESS upgraded to Buy
  • In Lending: TREE was upgraded to Outperform from Market Perform at Northland with a $60 price target as believes 2025 will still be about Insurance but will also see growth in Consumer and slightly better adj. EBITDA margins. RDFN reported home prices are rising in every major metro for the first time since 2022. In Cleveland, the median home sale price rose 15% year over year in December–the biggest increase among the 50 most populous metros. Next came Milwaukee (14.5%), Philadelphia (14%), Miami (11.8%) and Chicago (11.1%). NAVI was upgraded from Neutral to Buy at Seaport Global with $18 tgt based on a sum-of-the-parts analysis.
  • In Crypto: Before his inauguration on Monday, Donald Trump on Friday launched a new Solana-based cryptocurrency called Official Trump, or $TRUMP. He calls it the "official meme coin" of the Trump team. The Trump Organization owns an 80% share of the meme coin through its affiliates CIC Digital LLC and a related entity called Fight Fight Fight LLC, with their holdings to be unlocked over a three-year period (Reuters). The Trump coin launched at around $6.50 per token, according to CoinMarketCap, then peaked at $75.35 on Sunday. The meme coin quickly tumbled following the launch of Melania’s own cryptocurrency. The Trump coin currently trades around $37 with a market cap of $7.65 billion. IREN shares fell after announces sales agreement prospectus covers offering of up to $1B of ordinary shares that may be issued under at market issuance sales agreement
  • In Business Services: WSC shares rise on report of private equity takeover interest, according to a report by Semafor https://tinyurl.com/yc5z2zdh

Biotech, Pharma, MedTech and Services:

  • DYN said the FDA has granted fast track designation for DYNE-101 for treatment of myotonic dystrophy type 1.
  • EOLS shares jumped after guiding Q4 revs $79M above estimates of $77M and guided 2025 rev in range $345M-$355M (vs. est. $350.1M) and said it expects to receive FDA approval for its injectable hyaluronic acid, Evolysse, within the next 90 days and plans to launch in the U.S. in Q2 2025.
  • MRNA was awarded an additional $590 million from the US government to accelerate development of pandemic influenza vaccines as health officials struggle to contain a dangerous strain of bird flu in dairy farms.
  • WBA shares fell after the US Justice Department sued the company for allegedly dispensing millions of unlawful prescriptions in violation of the Controlled Substances Act and then seeking reimbursement

Industrials & Materials

  • In Industrial: Dow component MMM reported Q4 adj EPS $1.68 topping expectations of $1.66, driven by higher sales of industrial adhesives, tapes and electronics while sales of $5.508B topped consensus of $5.78B while guiding 2025 adj EPS $7.60-$7.90, as mid-point roughly in line with estimate of $7.77 per share. Cantor initiated AMPX with an Overweight rating and 12-month price target of $10.00; Amprius does not need U.S.-based production (facility would be owned and operated by AMPX) over the foreseeable future.
  • In Transports: Barclays downgraded Gap Airports (PAC) to EW from Overweight and maintain EW on ASUR in Mexican airports, fine tuning estimates on all Mexican airports following airlines expected capacity deployment in the near term. U.S. trucking activity fell in December, marking the first month-to-month decline since March and sending activity to its lowest level since the previous January, according to data released Tuesday by the American Trucking Associations. ATA reported that its seasonally adjusted for-hire index fell about 1.1% in December. With the decrease in November, the index was down 2.9% during the two months, according to the group (shares of truckers include CHRW, JBHT which posted weak earnings last week, LSTR, ODFL, KNX, etc.)

Aerospace & Defense

  • Space stocks (LUNR, RDW, ASTS, RKLB) shares jumped after President Trump comments yesterday as he set a new goal in his inauguration speech saying he wants to go to Mars. Shares of traditional space companies and NASA suppliers aren’t moving as much (BA, LMT).
  • Gov’t IT service names strong (CACI, LDOS, BAH) with broader mkt; also note Vivek Ramaswamy announced over weekend to leave D.O.G.E. to run for Ohio Governor may be lifting space today as well.
  • FTAI shares tumbled after saying its board determines to commence review in response to assertions by short seller Muddy Waters; says review includes engagement of independent advisers; the firm says they strongly disagree with assertions made in Muddy Waters report while noting they can’t rule out possible delay in filing 2024 10-k due to timing of report.
  • MRCY said it received a $24.5M contract to develop a data processing and storage subsystem for a U.S. Defense Department Satellite Program.
  • NOC and RTX were both upgraded to Buy from Neutral at Citigroup in U.S. A&D Q4 preview while concurrently launching coverage of both VVX and CW in separate notes with Buy-ratings. Citi says they expect to hear positive commentary from commercial aftermarket suppliers as traffic looks poised to grow above trend in 2025, and from commercial OE exposed names as production rates head higher.
  • RDW said it has agreed to acquire Edge Autonomy for $925M in a cash-and-stock deal.
  • VSAT said NASA selected them for a $4.82B contract to help the agency with communication services for its space missions.

Materials, Metals & Mining

  • In Agricultural, Crop, Seed Chemicals: CF was downgraded from Outperform to Sector Perform w/ $100 PT at RBC Capital saying the co remains a best-in-class operator that will continue to benefit from favorable North American nitrogen market dynamics but sees shares nearing full valuation along with n-t headwinds. Barclays with an industry note with several changes as they upgrade shares of FMC, LVRO, and ICL and downgrade BG, CF, MRFG, MOS, saying as they enter 2025, they are more optimistic about crop protection and maintain our positive outlook on diversified international protein names and ingredients. In contrast, they add caution to grain processor coverage and adjust ratings in fertilizer given the recent run-up in share prices. For fertilizer, seed and crop protection – they recognize that the strength in potash volumes in 2024 did not bring stock appreciation for major potash players and cut NTR to EW and MOS to UW (both from OW); foresee strength in nitrogen as up CF PT by 4% but downgrade the stock to EW; for Crop Protection, upgrade FMC to OW based on relative valuation, and upgrade LVRO to OW (from EW) also on a relative valuation basis; for grains/processing, we turn more cautious on both names, downgrading BG to EW from OW and maintaining UW on ADM.
  • In Paper & Packaging: IP to gain conditional EU antitrust approval for $7.1B acquisition of DS Smith (DSSMY) according to a Reuters report as the paper co agrees to sell assets to address EU competition concerns.

Internet, Media & Telecom

  • In Internet/Online: TikTok re-opened on Sunday after the US administration had allowed the blackout on Saturday night, as well as Trump expressing an interest to visit China within his for first 100 days. WIX upgraded to Strong Buy at Raymond James and raised tgt to $300 reflecting increased conviction in Wix Studio winning market share among partners/agencies from incumbent WordPress that should help drive a dual acceleration in growth and profitability. U.S. listed China stocks outperformed early (BABA, BIDU, PDD, NTES, etc.) as President Donald Trump holds off on China tariffs; Trump had threatened a 60% tariff on Chinese goods during his campaigns. Trump signs executive order to delay enforcement of ban on popular short-video app TikTok by 75 days but says he might impose tariffs on China if Beijing does not approve potential U.S. deal with TikTok. TME was upgraded to OW at Morgan Stanley calling it an underappreciated defensive play amid the market’s macro concern.
  • In Media & Telecom: WBD was upgraded to Buy from Hold at MoffettNathanson while FOXA was downgraded to Neutral from Buy. In telecom, Barclays downgraded BCE to Underweight from Equal Weight (cut tgt to $21 from $30) and cut RCI to EW from Overweight (tgt to $27 from $46) saying the Canadian telecom operating environment may continue to see headwinds for a while and stretched balance sheets leave little room for error. The firm says Bell and Telus have been forced to respond to wireless promotions but have also cut prices in wireline broadband to put pressure on Rogers and Quebecor, leading to a price war in both wireless and wireline.

Hardware & Software movers:

  • In Hardware/Services: AAPL was downgraded to Underperform from Hold at Jefferies and lower forecasts driven by weak iPhone sales and the general CE market and reduced outlook for iPhone 17/18 due to slower AI uptake and commercialization. We expect AAPL to miss its rev growth guidance of 5% for 1QFY25 and guide to only LSD rev growth in 2QFY25, also below consensus; AI outlook is subdued and our industry checks suggesting its advanced. Apple was also downgraded to Hold from Buy at Loop Capital.
  • TEM, AMZN, GOOGL, NVDA, PANW, VST shares active after California Representative Nancy Pelosi disclosed new stock trades, which included seven investments involving artificial intelligence equities, on the Inauguration day of President-elect Donald Trump. According to recent filings shared on January 20, Pelosi made a total of nine trades, with the majority focused on AI-related stocks. https://tinyurl.com/52b4cps8  
  • In Communications and Equipment: GLW shares hit the highest levels in over 20 years after Deutsche bank added shares to its Catalyst Call Buy list, as it ultimately sees shares moving higher into the March 18th Analyst Day. COMM was also named to the catalyst call Buy idea at Deutsche Bank saying for the better part of the last 2+ years, CommScope’s equity story has been challenged by two key dynamics, both of which are now turning in the right direction and that Q424 earnings could serve as a positive catalyst for CommScope shares.
  • In Software/AI: CBS News reported President Trump is poised to unveil a massive investment plan involving billions from the private sector aimed at enhancing AI infrastructure across the United States. Key players in this initiative include OpenAI, Softbank (SFTBY) and ORCL, who are jointly venturing on a project named "Stargate."
  • In IT Services & Consulting: Jefferies said they are positive on EXLS, CTSH into Q4 and upgrade Genpact (G) to Buy from Hold on expectations of further improvement in revenue growth on mgmt execution and AI fears dissipating. The firm said their Q424 and 2025 ests are mostly unchanged other than a stronger USD negatively impacting revenues. The firm expects positive commentary from most management teams as discretionary spend shows signs of picking up. However, guidance will likely be conservative in light of the false starts the past two years.

Semiconductors:

  • ALAB was downgraded to Equal weight from Overweight at Morgan Stanley as valuation prices in enthusiasm for the new PCIe switch products and ASIC ramps and said they don’t see any major catalysts that would warrant another re-rating.
  • QRVO was upgraded to Overweight at Morgan Stanley saying the company has struggled to achieve its margin targets, but the activist influence could inject some urgency (raise tgt to $106 from $90).
  • TER was downgraded to EW from OW at Morgan Stanley (tgt to $117 PT from $121) saying expectations for Teradyne to regain market share in 2025-2026 are too high, and the firm models for a more muted recovery in the company’s drivers (smartphone and NAND).

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Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.