S&P 500 (^GSPC) just posted its best week since the November election as a cooler-than-expected inflation reading eased fears that the Federal Reserve could rule out cutting interest rates throughout 2025.
The S&P 500 jumped more than 3% for the week, while the tech heavyweight Nasdaq Composite (^ IXIC) increased by more than 2.6%. Dow Jones Industrial Average (^ DJI) led the gains, rising nearly 4%.
A light economic calendar is set, welcoming investors with updates on activity in the services and manufacturing sectors, as well as consumer sentiment updates due for release.
In corporate news, 43 S&P 500 companies are expected to report quarterly results, highlighted by Netflix (NFLX:), United Airlines (UAL:), Johnson & Johnson (JNJ:), and 3M Company (mmmm).
SNP – Delayed quote•USD
Closes January 17th at 5:11:45 PM EST
^GSPC^ DJI ^ IXIC
Trump will be sworn in for a second term as president on Monday.US stocks have looked sluggish at times over the past few weeks as interest rates rise and fall debate over whether the Federal Reserve will cut interest rates 2025 sent the S&P 500 to its lowest level since the election.
But is it? A better-than-expected inflation reading on Wednesday helped U.S. markets rally, and Bank of America investment strategist Michael Hartnett believes S&P 500 stocks will be “protected” from further declines in coming months by President-elect Donald Trump.
In his first term as president, Trump viewed the stock market as a barometer for him the success of the administration. Many investors expect Trump to remain sensitive to the pullback in U.S. stocks during his upcoming turnaround.
There have been rallies around certain “Trump deals” such as small caps, energy stocks and financials. had fits and starts leading up to the inauguration This was an early appetizer for what many believe will be the stock market theme of 2025.
“January’s volatility ahead of Trump’s 1/20 inauguration reinforces the mainstream view of a more volatile year ahead,” Julian Emanuel, who heads Evercore ISI’s equity, derivatives and quantitative strategy team, wrote in a note to clients Thursday evening.
Emanuel, who sees the S&P 500 ending 2025 at 6,800, or about 13% higher than current levels, still maintains that the Trump administration will bring continued volatility among investors “risk on” and “risk on.” between “out” moods.
Traders work with President-elect Donald Trump on the floor of the New York Stock Exchange (NYSE) in New York on January 2, 2025. (TIMOTY A. CLARY/AFP via Getty Images) ·TIMOTHY A. CLARY via Getty Images
Last week we have noted hotter than expected December jobs report there was some debate as to whether or not a Fed rate hike would be back on the table.
A lower-than-expected inflation reading for December eased those fears. Bank of America Securities senior U.S. economist Aditya Bhave wrote in a Jan. 10 note to clients that the Fed’s talk was; “move to campaigns”.
After the December inflation data was released on January 15, Bhave told Yahoo Finance The report “cuts the risks to growth.” His team still believes the Fed will remain on hold for the foreseeable future.
Markets are likely to take a breather from the Fed’s deliberations in the coming week as no major economic data releases are expected and the central bank enters its “black period” during which no official speaks publicly until its next meeting on January 29. on the eve of a policy decision.
As of Friday afternoon, markets were pricing in one to two Fed rate cuts this year, according to Bloomberg data.
Fourth quarter earnings season kicked off in earnest last week with reports from the nation’s largest banks. the company’s results were better than expected. Data from FactSet showed the S&P 500 posting a 12.5% annualized gain in earnings this quarter, compared with 11.5% the previous week.
“While it’s early, it’s a great start to the reporting period, where we expect above-average overall pace and remain positive on the earnings outlook,” Citi U.S. equity strategist Scott Kronert wrote in a note to clients on Friday.
Earnings season kicks off this week with 43 S&P 500 companies headlined by tech giant Netflix. sworn into office.
“We expect political noise to pick up next week after Monday’s inauguration and a number of executive orders are reportedly expected,” Kroenert added. . [earnings] the reports are solid.”
For now, at least one of the market’s headwinds has cooled. Over the past week, the 10-year Treasury yield (^ TNX), which snapped higher and weighed on the stocksdecreased by almost 20 basis points to 4.61%.
Whether or not the conversation around Trump’s policies will bring bond yields back up will be the main story to watch in the coming week.
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Monday
Markets are closed for Martin Luther King Jr. Day before President Trump is sworn into office.
Tuesday.
Economic dataNo notable economic data releases.
Revenues: Netflix (NFLX:), 3M Company (mmmm), Capital One (COF:), Charles Schwab (SW:), D.R. Horton (DHI:), KeyCorp (KEY:), Interactive Brokers Group (IBKR:), United Airlines (UAL:), Zions Bancorporation (ZION)
wednesday
Economic dataMBA mortgage applications, week ending January 17 (+33.3% prior); Leading index, December (-0.1% expected, +0.3% ahead)
Economic dataInitial Jobless Claims, Week Ending Jan. 18 (previously 217,000); Kansas City Fed. Manufacturing activity, January (-4 ahead);
Revenues: American Airlines (AAL:), Alaska Airlines (ALK:), CSX Corporation (CSX:), Freeport-McMoRan (FCX:), GE Aerospace (GE:), intuitive surgical (ISRG:), Texas Instruments (TXN:), Union Pacific Corporation (UNP:)
Economic dataS&P Global US manufacturing PMI, preliminary January (49.4 ahead); S&P Global Services PMI, preliminary January (56.8 ahead); S&P Global US Composite PMI, January (55.4 ahead); University of Michigan consumer sentiment, January final (up 73.2); Existing home sales, December (expected 1.2%, previously 4.8%)
Revenues. American Express (AXP:), First Citizens BancShares (FCNCA:), NextEra Energy (NO), Verizon (VZ:)
Josh Shaffer is a reporter for Yahoo Finance. Follow him on X @_joshschafer:.
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