Market Review: January 24, 2025

Closing Recap

Friday, January 24, 2025

Index

Up/Down

%

Last

DJ Industrials

-140.82

0.32%

44,424

S&P 500

-17.47

0.29%

6,101

Nasdaq

-99.38

0.50%

19,954

Russell 2000

-6.86

0.30%

2,307

 

 

 

 

 

 

 

 

 

U.S. stocks slipped on Friday, snapping the 4-day losing streak for the S&P but still posted solid gains on the week (including a new record high Thursday) behind better economic data, upbeat earnings results, positive tech/AI developments, improved investor sentiment following Trump policy announcements and positioning ahead of the FOMC meeting next week. Market concerns that President Donald Trump’s proposed tariffs could exacerbate inflationary pressures and slow Fed rate cuts eased this week after he referred to trade policy multiple times without providing concrete details of his plans. Trump has said tariffs for Mexico, Canada, China and the European Union could be announced on Feb. 1. Meanwhile, the Fed is expected to keep rates unchanged when it concludes its two-day meeting on Wednesday, though investors will be watching for any clues that a rate cut could come in March if inflation continues to ease closer to the U.S. central bank’s 2% annual target. Investors will also be watching for key inflation data next week with the PCE results on Friday. Next week earnings activity picks up as ~23% of the SPX is scheduled to deliver reports led by: AAPL, MSFT, META, TSLA, IBM, SBUX, GM, Visa, UPS, MA, TMUS, CAT, CMCSA, CVX, XOM LMT, AT&T and many others.  For the week, the S&P 500 gained 1.74%, the Nasdaq climbed 1.65%, and the Dow climbed 2.15%.

 

The Bank of Japan (BOJ) held its Monetary Policy Meeting on January 23-24 and decided to raise the policy interest rate from 0.25% to 0.5%, which was in-line with Street expectations. The BOJ also outlined its stance on the conduct of monetary policy after this rate hike, stating that “if the outlook for economic activity and prices will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation”. Alongside the rate hike decision, the BoJ revised its inflation forecasts upwards while maintaining GDP projections.

Economic Data

  • S&P Global January flash manufacturing PMI at 50.1 (vs 49.4 in December), S&P Global January flash composite PMI at 52.4 (vs 55.4 in December) and S&P Global January flash services PMI at 52.8 (vs 56.8 in December).
  • Existing Home Sales for December rose 2.2% to 4.24M unit rate vs. consensus 4.19M and vs Nov 4.15M; Dec inventory of homes for sale 1.15M units, 3.3 months’ worth; national median home price for existing homes $404,400, +6.0% from Dec 2023; 2024 existing homes sales 4.06M units, lowest annual level since 1995.
  • University of Michigan surveys of consumers sentiment final Jan slips to 71.1 from preliminary Jan 73.2 and final Dec 74.0 (est. 73.2); expectations index final Jan 69.3 vs prelim Jan 70.2 and final Dec 73.3; current conditions index final Jan 74.0 vs prelim Jan 77.9 and final Dec 75.1
  • Inflation expectations rise as University of Michigan surveys of consumers 1-year inflation outlook final Jan 3.3% vs prelim 3.3% and final Dec 2.8% and the University of Michigan surveys of consumers 5-year inflation outlook final Jan 3.2% vs prelim 3.3% and final Dec 3.0%.

Commodities

  • WTI and Brent end slightly higher after a choppy week of trading, with WTI crude rising $0.04 to $74.66 per barrel and Brent rising $0.21 to $78.50 per barrel. For the week, WTI crude declined -3.53% while nat gas rose 2% to $4.027 mln btus. Prices were volatile after President Trump raised the prospect of trade wars, demanded OPEC+ lower crude prices, but also said he’d prefer not to impose tariffs on China.
  • February gold prices rose $13.9 to settle at $2,778.90 an ounce, off earlier highs of $2,794.80 as a weakening dollar on U.S. President Donald Trump’s push for lower rates and tariff uncertainty drove the metal towards its fourth straight weekly rise. Gold prices rose just under 3% this week closing just below record highs of $2,790.15 in Oct.

Currencies & Treasuries

  • The U.S. dollar index (DXY) was down -0.65% at 107.35, posting a weekly decline of around -1.8%, its worst week since November 2023. The pullback comes after reaching 110.17 just 11 days ago on 1/13, the highest since November 2022. The Chinese yuan also got a lift on the back of Trump’s remarks, while the Euro rose 0.83% to $1.0501, on track for +2.25% weekly gains, its best since July 2023. Trump said on Thursday that he wants the Federal Reserve to cut interest rates (note the U.S. central bank is due to meet next week). The dollar spike after the Presidential election was due to aggressive tariff comments by Trump, but the buck has since pulled back on expectations that tariffs enacted by U.S. President Donald Trump will be lower than previously feared.

 

Macro

Up/Down

Last

WTI Crude

0.04

74.66

Brent

0.21

78.50

Gold

13.90

2,778.90

EUR/USD

0.0079

1.0494

JPY/USD

-0.26

155.79

10-Year Note

-0.013

4.623%

 

Sector News Breakdown

Autos:

  • In Auto Suppliers: DAN announces new organizational structure, updates on proposed off-highway sale and announced changes to its reportable business segments, which will take effect in the first quarter of 2025. The company’s Power Technology segment will be split, integrating the OEM-facing businesses into its Light Vehicle Drive Systems segment and the aftermarket business into its Commercial Vehicle Drive and Motion Systems. MGA was upgraded to Outperform from Sector Perform at RBC Capital (tgt to $52 from $41) saying channel checks suggest that while downshifting sequentially, as typical with seasonality, January U.S. auto sales are holding up.
  • In Auto Dealers: AN was downgraded to Equal Weight from Overweight at Stephens as notes the stock price has appreciated by about 16%, its 2025 EBITDA and EPS estimates are slightly lower and now estimates that the 2025 ending share count will be about 2% higher. Conversely, the firm upgraded SAH to Overweight from Equal Weight (tgt to $83 from $64) calling Sonic the cleanest, simplest way to play a growing U.S. new vehicle SAAR in 2025.

Retail, Consumer Staples & Restaurants:

  • In Retailers: Luxury retail gets good news after Burberry (BURBY) shares rise after results, posting Q3 retail comparable sales -4% vs. -4% y/y and better than the expected -12.8% decline with smaller comp losses in Asia (-9% vs. est. -19.6%) and China (-7% vs. est. -18%) while America comparable sales rose an unexpected +4% vs. est. -9.4%; shares of other luxury retailers TPR, CPRI, RL, PPRUY, CFRUY, EL, LVMUY were active in reaction. PVH was downgraded to Neutral at JP Morgan and lower tgt to $114 while remove from its analyst focus list after lowering its FY25 reported revenues to a -1.4% decline (= 230bps below Street +0.9%), or +0.3% on a constant-currency basis (more/less matching its 2H24 constant-currency growth rate of +0.1%).
  • In Restaurants: EAT was downgraded to Sector Weight from Overweight at Keybanc on valuation, following the stock’s >200% run over the past nine months (vs. 19% for the S&P 500). QSR was upgraded to Buy from Neutral at Guggenheim noting shares have slid 19% in the past year, while the S&P 500 rose 26%, and thinks Chairman Doyle has been making the right strategic improvements to the business.

Energy, Industrials and Materials

  • In Energy: CVX said it had started production at a $48 billion expansion of the giant Tengiz oilfield which will bring its output to around 1% of global crude supply. President Trump appears to have opened the door for construction of the Keystone XL pipeline while his administration is freezing authorizations for wind and solar projects on federal lands and water, underscoring the sharp Washington policy pivot to favor fossil fuels over renewables. In the LNG sector, VG 70M share IPO opened at $24.05, below the offering price of $25.
  • In Clean Tech Energy: JP Morgan said the clean technology group faced a challenging setup in 2024, amid still elevated interest rates, waning balance sheets, and slower than expected demand growth. The firm expects its coverage of primarily unprofitable growth stocks to face similar headwinds into 2025, with electric vehicles, EV charging, and hydrogen in a holding pattern until project developers and customers have more policy certainty under the second Trump administration. On the stocks, JPMorgan sees further volatility ahead. Its top picks into 2025 are Overweight-rated EVGO and ENVX, which the firm views as more defensive plays within clean tech
  • In Nuclear/Utility sector: OKLO price tgt raised to $45 from $26 at Wedbush saying confidence in the AI Revolution datacenter buildout is increasing under the Trump Administration and believe Project Stargate is the start of a much bigger AI initiative within the Beltway and US. GEV was downgraded to Neutral from Buy at Guggenheim after stock’s strong recent performance, and belief that the pace of upward revisions in financial model is likely to slow. NEE said requested NRC licensing change for Duane Arnold, its1st step to potentially restarting plant in 2028, while reported Q4 EPS of $0.58, down y/y and revs $5.39B vs. est. $7.07B.
  • In Trucking/Rails: CSX shares slipped on in-line Q4 EPS of $0.42, while revs of $3.54B miss est. $3.576B as Q4 Operating income fell -16% y/y to $1.11B (est. $1.24B) and total carloads rose 1.3% y/y to 1.58M; CVLG shares fell on Q4 rev miss ($277.3Mm vs est. $284.91Mm) and noted in their dedicated markets, customers continue to experience greater than expected temporary customer shutdowns and volume pressure.
  • In Metals & Mining: in copper, FCX was downgraded to Hold from Buy at Jefferies and cut tgt to $40 from $48 citing the company’s ongoing challenges in Indonesia, the impact of its higher spending on estimates, and its neutral near-term view on copper for the downgrade. In Steels, Jefferies upgraded STLD to Buy from Hold and raised tgt to $145 after quarterly results noting management emphasized its near-term focus is to execute on the ramp-up of its organic growth.
  • In Industrials: OSK was upgraded to Overweight from Sector Weight at Keybanc with $113 tgt noting they recently attended World of Concrete, where the tone was optimistic, booth traffic was noticeably stronger than recent years, and most people it talked to expect a strong 2025 following an underwhelming 2024. TXT was downgraded to Neutral at Bank America on near-term challenges.
  • In Chemicals: APD was upgraded to Overweight from EW at Barclays and raised tgt to $365 from $315 saying a shareholder vote for change helps turn the page back to the core business, which should drive compounding stock returns. CF was downgraded to Underweight from Neutral at JP Morgan and cut tgt to $75 from $82 saying they think there is more downside risk than upside appreciation potential in the shares at current price levels. SHW was upgraded from Hold to Buy at Berenberg and raised tgt to $420 from $321 saying they feel earnings growth is about to accelerate, and the same is true of its free-cash-flow generation noting PPG’s divestments of its US and Canadian architectural paint business and the 2024 shutdown of smaller competitor Kelly-Moore have brought structural changes to the US decorative paints market.
  • Aerospace & Defense: BA disclosed Q4 sales of $15.2B below the Street $16.8B, and EPS loss of (-$5.46) well below the Street (-$1.73), and FCF outflow of (-$3.5B) above Street ($4.1B); said BCA sales were indicated at $4.8B, in-line w/ Street, albeit with EBIT indicated at (-$2.1B) well below Street (-$1.05B) on $1.1B of 777X/767 charges related to the IAM agreement. LUNR shares rise after saying was awarded ~$2.5M NASA study contract to advance lunar logistics handling and offloading, as well as surface cargo and mobility. MOG shares fell after earlier guided FY EPS of $8.20 (vs. est. $8.26) and rev of $3.70B vs Street expectation for $3.712B.

Banks, Brokers, Asset Managers:

  • In Banks: BY Q4 EPS $0.69 vs. est. $0.61; Q4 revs $104.67M vs. est. $100.37M; Q4 net interest income $88.5M; Q4 credit loss provision -$6.9M. COLB Q4 EPS $0.71 vs. est. $0.65; Q4 net interest margin 3.64% vs. 3.78% last year; Net interest income increased by $7M from the prior quarter; Non-interest income decreased by $16M. CUBI Q4 core EPS $1.36 vs est. $1.21, NIM 3.11%, core ROCE 10.44%, CET1 capital ratio 12%. DCOM upgraded to Overweight at Piper following results and guidance. EWBC announces $300M share repurchase authorization and mixed Q4 results as EPS $2.10 vs. est. $2.12; reports FY24 revenue $2.62B vs. est. $2.60B; revs strong but results were impacted by higher expenses and credit costs. MCB Q4 EPS $1.88 vs est. $1.42 on NII $66.6Mm vs est. $64.06Mm. SSB Q4 adj EPS $1.93 vs. est. $1.72; Q4 net interest margin (NIM) 3.48% vs. 3.40% q/q and NII $370M; Q4 Tangible Book Value per share was $51.11 from $51.26 q/q.
  • In Crypto: President Donald Trump signed an executive order Thursday establishing a crypto working group to be led by David Sacks, the administration’s AI and crypto czar, but he did not create a bitcoin stockpile at this time. The order charges the team, which will include the Treasury Secretary, Attorney General and head of the SEC, with coming up with an overall federal strategy for regulating crypto assets and stablecoins. It overturns prior executive actions by the Biden administration and forbids further work on central bank digital currencies.

Insurance & Services:

  • In Consumer Finance: AXP hits all-time highs and posts Q4 EPS $3.04 on revs rose 9% y/y to $17.18B vs. est. $3.03/$17.18B; increase quarterly dividend 17% to $0.82 from $0.70; Billed business, a measure of spending on AmEx cards, rose 8% to $408.4B in Q4; guides 2025 rev growth +8% to +10% and EPS $15-$15.50 vs. est. $15.23. MA and Visa (V) failed to stop their payment networks from laundering proceeds from child sexual abuse material and sex trafficking on the popular website OnlyFans, according to allegations in a previously undisclosed whistleblower complaint filed with the U.S. Treasury’s financial crimes unit – Reuters reported.
  • In FinTech: AFRM expanded its partnership with Liberty Mutual saying the insurer’s asset mgmt arm Liberty Mutual Investments to upsize loan purchasing program and will buy up to $750M of AFRM’s loans through Jun 2027. TOST was initiated at Outperform and $46 tgt at Oppenheimer saying its cloud-based platform should fuel continued market share gains by capturing the restaurant industry’s ongoing shift from legacy technology to omni-channel
  • In Insurance: In P&C space, TRV was upgraded to Overweight from Neutral at Piper after stronger-than-expected Q424 results and increasing its EPS estimates as now thinks the stock is inexpensive.
  • In Financial Services: XP was upgraded to Buy from Neutral at UBS but cut PT to $16 from $19 as believes its valuation has more than incorporated the tough Brazilian macro assumptions – its shares have dropped ~52% in US$) in the LTM.

Biotech & Pharma:

  • In Pharma: MRK’s blockbuster drug Keytruda and Eisai’s cancer drug Lenvima, in combination with chemotherapy, failed to improve overall survival in patients with a type of esophageal cancer in a late-stage trial. EXEL was downgraded to Perform at Oppenheimer as it is concerned about the potential differentiation of zanzalintinib vs cabozantinib following the abstract for STELLAR-001 at ASCO-GI.
  • In Weight loss/obesity sector: NVO shares jumped after announced new data for a new weight-loss drug which appeared to be more efficient than its blockbuster drugs currently on the market, Ozempic and Wegovy. The mid-stage clinical trial showed patients that moved to the highest dosage of 20mg of the new medicine Amycretin lost 22% of their body weight in over 36 weeks (LLY, VKTX, ALT shares edged lower)
  • In Vaccines: MRNA was awarded tender to supply its mRNA COVID-19 vaccine in the European Union, Norway and North Macedonia, allowing 17 countries to access the vaccine for up to four years; news comes after MRNA cut its 2025 sales forecast by $1 bln earlier this month, partially due to weak demand for its COVID-19 vaccines.

Healthcare Services & MedTech movers:

  • In MedTech: ISRG reported Q4 results that topped consensus on both the top and bottom-line (EPS $2.21 vs. est. $1.81 while revs rose 25% y/y to $2.41B vs. est. $2.26B) while mgmt reaffirmed its initial ’25 procedure guidance provided earlier this month 13-16% y/y and issued margin guidance (67-68%) that was lower than Piper’s model (68.7%) and op ex growth guidance (+10-15% y/y) versus its +14.3% bogey.
  • In Hospitals: HCA shares dropped after results as Q4 EPS of $5.63 missed estimates of $6.14, while same facility admissions increased 3% and same facility equivalent admissions increased 3.1%; did announce additional repurchase program for up to $10B.

Internet, Media & Telecom

  • In Telecom: VZ reported in-line Q4 EPS of $1.10 and slightly better revs of $35.7B (est. $35.34B) as higher prices helped revs; Verizon added 568K monthly bill-paying wireless subscribers in Q4, up from 449K y/y and above ests for roughly 488K adds; guides 2025 annual profit growth between 0%- 3% vs. est. 2.7% and guides 2025 free cash flow (FCF) $17.5B-$18.5B, as midpoint below estimates of $18.44B. In telco equipment, ERIC shares fell as Q4 adj operating profit expectations missed consensus reflecting a slowdown in India (profit was 9.8 billion crowns in the quarter, up from 7.4 billion a year earlier, yet fell short of the 10.3 billion crowns consensus).

Semi’s, Hardware & Software movers:

  • In Software: TWLO shares surged, as analysts raised price tgts after positive Investor Day commentary, and its direction. TWLO guided positive Q4 prelim results (11% growth vs 8% cons), attractive forward-looking margin targets (21%-22% in FY27 vs. est. 16%; $3B+ cumulative FCF in FY25-FY27), and $2B stock buyback through 2027.
  • In Semiconductors: TXN reported strong Q4 results, which were above expectations and provided mixed Q1 guidance, as revs were slightly higher, while EPS is lower due to lower GMs. TXN noted strength in China, which grew 15% y/y with continued strength in autos and PE. Shares of NVDA, TSM, AVGO, ANET among upside movers early after META guided 2025 CAPEX $60B to $65B well above consensus est. $51.31B.

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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.