January 24th Market Overview

Happy Friday.

Markets closed lower today but wrapped up a strong week overall. Manufacturing hit a 7-month high while consumer confidence dropped on inflation concerns - first decline in six months.

President Trump's "rather not use tariffs" comments on China shifted sentiment ahead of next week's Fed meeting.

Let's dig in...

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Executive Summary

• S&P 500 hit fresh intraday record of 6,091.79 before pulling back, marking its second-fastest reversal from a two-month low in the index's 95-year history
  

• Major indices set to close the holiday-shortened week up over 2%, despite today's profit-taking
  

• Manufacturing PMI surpassed expectations at 50.2, entering expansion territory for the first time since spring 2024, while services activity hit a 9-month low
  

• Consumer sentiment dropped to 71.1 from 74.0 as inflation expectations jumped to 3.3%, with survey respondents specifically citing tariff concerns
  

Market Overview

Key Market Drivers

1. Manufacturing Sector Shows Signs of Life: PMI reading jumped to 50.2 from 47.7, marking expansion for the first time since spring 2024. However, services PMI fell to 52.8, a nine-month low, highlighting uneven economic recovery. Joint manufacturing and services outlook remains at highest levels since May 2022.
   

2. Housing Market Defies High Rates: December existing home sales rose 2.2% to 4.24M annual units, strongest since February 2024. Median home price climbed 6% year-over-year to $404,400, with luxury segment showing particular strength as $1M+ homes saw 35% sales increase.
   

3. Consumer Confidence Takes Inflation Hit: Michigan sentiment fell to 71.1 from 74.0, first decline in six months. Survey director Joanne Hsu noted "concerns over future inflation trajectory were visible throughout interviews and tied to beliefs about anticipated policies like tariffs." Year-ahead inflation expectations surged to 3.3% from 2.8%.
   

4. Safe Haven Demand Drives Gold: Spot gold approached record territory at $2,781 per ounce, just shy of October's $2,790 peak. Gains accelerated following Trump's Davos comments on interest rates and growing uncertainty around trade policy implementation.
   

Stock Spotlight

• $META: ▲ 2.96% to $645.66. Zuckerberg unveiled $60-65B AI investment, targeting 1 billion AI users in 2025. Plans include Manhattan-scale datacenter and Llama 4 model launch. Record high close.
  

• $NVO: ▲ 8.26% to $87.80, claiming Europe’s highest market cap. Amycretin weight-loss drug achieved 22% reduction in 36-week trial. Novel dual-hormone mechanism positions company ahead in obesity market.
  

• $TWLO: ▲ 19.75% to $135.80. Projects 21-22% operating margins by 2027, crushing 16.1% consensus. Q4 revenue growth of 11% topped 8% estimates on AI integration success.
  

• $TXN: ▼ 7.14% to $186.28. Q1 guidance of $0.94-$1.16 EPS missed $1.17 estimate. Auto market weakness persists across Europe, Japan, and U.S.
  

• $PLTR: Eight straight positive days matches longest streak since 2020 IPO. AI enthusiasm drives gains.

Big Name Updates

• $BA: Projects $3.5B quarterly loss on strike disruptions and labor costs. Stock down 1% as recovery timeline extends.
  

• $AXP: ▼ 2.42% to $318.00. Beat Q4 estimates (EPS $3.04 vs $3.03) but 8-10% revenue growth outlook missed expectations. Net income hit $2.17B.
  

• $ISRG: ▼ 4.22% to $583.00. Worst day since October on margin guidance cut (67-68% vs 69.1%). Citi remains bullish, sets $711 target.

Other Notable Company News

• $GRNDR: ▲ 7% on raised growth outlook amid broader tech strength.
  

• $XBI: Biotech sector ETF posts best week since July 2024, up 5.5%. $NVO trial success lifts sector.
  

• $MRNA: Weekly surge of 25.5%, strongest since March 2022. mRNA advances drive gains.

Sector Watch

Bond Market

Treasury yields declined amid Trump’s aggressive rate cut stance at Davos. Fed funds futures remain steady at 99% probability for unchanged rates at January 31 meeting.

Dollar Index touched one-month low at 107.49, ▼ 0.52%. Gold approached record territory at $2,781 per ounce as markets process policy uncertainty.

Policy Watch

Federal Reserve enters pre-meeting blackout period amid heightened political pressure. Next week marks first policy decision of Trump’s second term, with markets focused on Powell’s response to White House calls for “immediate” rate cuts.

On trade front, Trump’s Fox News comments signaled potential policy shift: “We have one very big power over China, and that’s tariffs… I’d rather not have to use them.” Key dates approach:

• February 1 deadline for potential 25% Canada/Mexico tariffs

• Proposed 10% China duties under review

• Administration directive issued for broad trade policy evaluation

Recent dollar weakness largely stems from:

• Trump election and Republican sweep implications

• Strong economic data shifting Fed cut expectations

• Uncertainty around tariff implementation timeline

Bank of America analysts note markets continue pricing tariff risk despite softened rhetoric: “Even if delayed, tariffs likely remain key policy pillar for new administration.”

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What to Watch Next Week

1. Federal Reserve Meeting: First policy decision under Trump administration. Watch for Powell’s response to political pressure on rates.

• Meeting concludes Wednesday with statement release

• Markets pricing 99% chance of unchanged rates

2. Big Tech Earnings: $MSFT, $META, and $AAPL report quarterly results

• First chance for tech executives to comment on Trump agenda

• AI investments and forward guidance take center stage

3. Tariff Implementation Timeline: February 1st deadline approaches for potential new duties

• 25% proposed for Canada/Mexico

• 10% proposed for China

• Watch for last-minute negotiations or delays

4. Manufacturing Data Follow-through: Monitor if expansion continues after January’s return to growth

• Supply chain impacts from tariff threats

• New order trends

• Employment components